The following figure depicts possible indifference curves of Alan, whose utility depends on his and/or his friend Beatrice’s levels of consumption. Alan’s consumption is along the horizontal axis while Beatrice’s consumption is along the vertical axis. Look at the figure and select the letter(s) that could represent altruistic preferences.Multiple choice
A
(a)
B
(b)
C
(c)
D
(d)

Question

The following figure depicts possible indifference curves of Alan, whose utility depends on his and/or his friend Beatrice’s levels of consumption. Alan’s consumption is along the horizontal axis while Beatrice’s consumption is along the vertical axis. Look at the figure and select the letter(s) that could represent altruistic preferences.Multiple choice

A

(a)

B

(b)

C

(c)

D

(d)

BlackTom AI · Accepted Answer

Altruistic preferences mean Alan’s utility increases when either his own consumption (A) or Beatrice’s consumption (B) increases; mathematically u_A > 0 and u_B > 0. 1. Relevant concepts - Marginal utilities: u_A is marginal utility of Alan’s consumption, u_B of Beatrice’s. - Indifference curve slope: along u(A,B) = constant, du = u_A dA + u_B dB = 0, so dB/dA = −u_A/u_B. - Monotonicity: if both partials are positive, higher A or higher B (holding the other fixed) increases utility, so indifference curves must slope downward (dB/dA < 0) and higher indifference curves lie to the northeast. 2. Step-by-step reasoning - Start with du = u_A dA + u_B dB = 0. - Solve for slope: dB/dA = −u_A/u_B. - Since altruism implies u_A > 0 and u_B > 0, their ratio is positive, so dB/dA is negative. - Therefore, indifference curves for altruistic preferences must slope downward: an increase in B must be compensated by a decrease in A to keep utility constant. 3. Intermediate calculation shown - du = 0 => u_A dA + u_B dB = 0. - dB/dA = −u_A/u_B. - With u_A > 0 and u_B > 0, −u_A/u_B < 0. 4. Why (c) is correct - Option (c) shows indifference curves that slope downward (and typically are monotone and convex), consistent with both partial derivatives being positive. That shape indicates Alan values increases in Beatrice’s consumption (altruism): raising B allows lowering A while keeping utility unchanged. 5. Why other options are incorrect - (a) depicts vertical indifference curves (utility depends only on A): u_B = 0, not altruistic. - (b) depicts upward-sloping curves (utility falls when B rises): u_B < 0, implying spite or jealousy, the opposite of altruism. - (d) shows non-monotonic or kinked/ambiguous shapes that do not reflect strictly positive marginal utility for B across the domain (e.g., utility might not increase with B everywhere), so it fails the definition of pure altruism. 6. Conclusion Because altruism requires u_A > 0 and u_B > 0, yielding downward-sloping indifference curves, option (c) is the only choice consistent with altruistic preferences. This matches the provided answer: (c).

Similar Questions

Edgeworth

An indifference curve represents bundles of goods that a consumer (choose all correct answers):

Suppose Abed’s indifference curves for two goods are shown by the figure below. What must be true about Abed’s consumer behaviour?

Indifference curves that are perfect right angles, like in the diagram, violate:

Indifference curves that are perfect right angles, like in the diagram, violate:

An indifference curve of the perfect substitutes:

An indifference curve represents bundles of goods that a consumer (choose all correct answers):

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler