An Incorrect Set of Indifference Curves

An Incorrect Set of Indifference Curves - An Incorrect Set...

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An Incorrect Set of Indifference Curves The indifference curves we have been considering are for normal goods. How can we tell? Because more of either good increases utility. Starting on curve 1 and moving outwards (increasing the number of hats) or upwards (increasing the number of shirts) lands us on curve 2, representing a higher level of utility. Using different types of goods changes what indifference curves look like. For instance, if one good is a normal good, such as CDs, and the other good is an undesirable good, such as Spam, the indifference curves will look like this, with the second indifference curve being better than the first: Utility Curves for Normal and Undesirable Goods As you can see, an increase in number of CDs causes an increase in utility, since we end up on a better indifference curve, but an increase in the amount of Spam results in a decrease in utility. What if the consumer doesn't care about one of the goods, meaning that getting more or less of that good doesn't make them happier or unhappier? For instance, replace the Spam with expired
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This note was uploaded on 02/09/2012 for the course ECO ECO2013 taught by Professor Jominy during the Fall '08 term at Broward College.

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An Incorrect Set of Indifference Curves - An Incorrect Set...

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