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#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
The negative slope in the indifference curve simply represents that both goods are wanted; in order to maintain indifference, a [...] must be compensated for by [...]
decrease in one

an increase in the other

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
The negative slope in the indifference curve simply represents that both goods are wanted; in order to maintain indifference, a [...] must be compensated for by [...]
?

Tags
#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
Question
The negative slope in the indifference curve simply represents that both goods are wanted; in order to maintain indifference, a [...] must be compensated for by [...]
decrease in one

an increase in the other
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pan>The indifference curve represents our consumer’s unique preferences over the two goods wine and bread. Its negative slope simply represents that both wine and bread are seen as “good” to this consumer; in order to maintain indifference, a <span>decrease in the quantity of wine must be compensated for by an increase in the quantity of bread.<span><body><html>

#### Original toplevel document

3. UTILITY THEORY: MODELING PREFERENCES AND TASTES
n below and to the left of the indifference curve. Exhibit 2. An Indifference Curve Note: An indifference curve shows all combinations of two goods such that the consumer is indifferent between them. <span>The indifference curve represents our consumer’s unique preferences over the two goods wine and bread. Its negative slope simply represents that both wine and bread are seen as “good” to this consumer; in order to maintain indifference, a decrease in the quantity of wine must be compensated for by an increase in the quantity of bread. Its curvature tells us something about the strength of his willingness to trade off one good for the other. The indifference curve in Exhibit 2 is characteristically drawn to be convex

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