Question

True or false justify your answer:
The indifference curve exhibits an increasing MRS between goods (x ,y)

Budget constraint reflects the matching between willingness and ability of the consumer

If income increases then the B.L shifts inward other things constant

Answer 1

1. This given statement is TRUE as the indifference curve is exhibiting an increasing marginal rate of substitution between goods as it is concave in nature.

2. Budget constraints doesnot reflect the matching between the willingness and the ability of the customer as this statement is FALSE.

Demand of a product reflects the matching between the willingness and the ability of the customer to buy a product.

3. This given statement is FALSE as when the income is increasing, the BL shift towards outwards as other thing remaining constant as it is leading to increase in potential demand.