A higher indifference curve denotes a _____________.

higher level of satisfaction

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lower level of satisfaction

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same level of satisfaction

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none of the above

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Solution

The correct option is A higher level of satisfaction
Higher indifference curve denotes a higher level of satisfaction. Higher indifference curve represents large bundle of goods, which means more utility because of monotonic preference. In the image we see, that IC₂ gives more satisfaction than IC₁ and IC₃ gives more satisfaction than both IC₁ and IC₂.

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