Question

The indifference curve analysis also explains __________.

• A. the demand for inferior goods
• B. the demand for superior goods
• C. both (A) and (B)
• D. none of the above

Answer 1

The correct option is A the demand for inferior goods

The indifference curve is a combination of two goods which would give the consumer the same amount of utility. Every point on the indifference curve would be a point where the consumer is indifferent. The indifference curve is downward sloping because for the consumer to purchase of more of some good, it has to give up some of another good. We will have an concave indifference curve when the two good on the indifference curve reduce utility. These could be inferior goods.