Question

Suppose that Nistha gets 40 units of utility when she consumes 2 pizza and 3 soft drinks and she gets 40 units of utility when she consumes 3 pizza and 1 soft drink. Then,

• A. These two combinations of pizza and soft drink must lie on the same budget line.
• B. Nistha must like soft drink more than pizza.
• C. These two combinations of pizza and soft drink must lie on the same indifference curve.
• D. Nistha must like pizza more than soft drink.

Hint:

Diminishing marginal rate of substitution is rooted in diminishing marginal utility.

Answer 1

The Correct Option is C

An indifference curve is defined as the set of all combinations of two goods that give a consumer exactly the same level of total utility.
Since both combinations described here, 2 pizzas with 3 soft drinks, and 3 pizzas with 1 soft drink, produce exactly the same utility level of 40 units, they satisfy this definition directly.
They therefore lie on the same indifference curve, regardless of how strongly Nistha personally prefers one good over the other or what her budget happens to be, which makes option 3 correct.