Yue Xe enjoys both ice cream and chocolate. Their preference…
Yue Xe enjoys both ice cream and chocolate. Their preferences over these two goods are complete, transitive and non-satiated/monotone, and the two goods are imperfect substitutes. Which of the following statements are true regarding Yue Xe’s indifference curves? (i) If the indifference curve containing bundle A is above the indifference curve containing bundle B, then Yue Xe prefers bundle A over bundle B. (ii) Yue Xe’s indifference curves always cross at one point. (iii) Yue Xe’s marginal rate of substitution between ice cream and chocolate diminishes the more ice creams they consume.