A consumer consumes only two goods. If the price of one of the goods falls, what happens to the indifference curve?

a. Shifts upwards

b. Shifts downwards

c. Can shift both upwards or downwards

d. Does not shift

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Solution

The correct option is D- Does not shift
A consumer consumes only two goods and if the price of one good fall, the indifference curve does not shift either upward or downward. There is no impact on prices here because the indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent.

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A consumer consumes only two goods. If the price of one of the goods falls, what happens to the indifference curve? a. Shifts upwards b. Shifts downwards c. Can shift both upwards or downwards d. Does not shift

A consumer consumes only two goods. If the price of one of the goods falls, what happens to the indifference curve?

a. Shifts upwards

b. Shifts downwards

c. Can shift both upwards or downwards

d. Does not shift