Carl likes both chocolate and ice cream. Assume that the \"more is better\" prin

Question

Carl likes both chocolate and ice cream. Assume that the "more is better" principle applies to Carl; that is, he would always prefer to consume more of elther goed, holding the consumption of the other good constant. (Using the terminoiogy of preferences, this means you assume that his preferences are monotonic.) The points on the following diagram represent combinations of ice cream and checolate that Carl might choose to CHOCOLATE Bars per week ICE CREAM ICones per week Given only the information on the preceding dingram, you can be sure that Carl strictly prefers bundie C to bundle A and that he strictly prefers bundle A to Given only the information on the preceding diagram, what can you say about how Carl r enks bundles E and F Hepreers E to F O He prefers F to E There is not enough information to compare the utility he recelves from F versus E O He is indifferent between E and F The folowing diagram shows the same peints as the previous graph, but it also shows some of Car's indifferenore curves: U1, U2, and U3. More information about Cart's preferences is tound In these curves than on the diagram you used to answer the previous questions CHOCOLATE Bars per weekd

Explanation / Answer

All the answers filled are correct.

When both good are normal goods then the consumer prefers to have more of both the good.

Point C in the first graph gives highest combination of both the good. Thus C is preferred to A and A gives more of both the goods than bundle B. Thus A is preferred to B

For comparing E and F we don't have enough information.

Points that lie on the same indifference curve gives same utility. We remain indifferent between bundles lying on the same indifference curve. Also consumer prefers move to higher indifference curve that is to the right.

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