Chapter 1. eFigure 4.14

Animated Graph
A Consumer's Indifference Curves
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You must read each slide, and complete any questions on the slide, in sequence.
E-Figure Title
Question 1 of 4

Question 1.

If the price of a pair of socks was less than $5, the price Sarah currently faces, what would happen to the intercept on the x-axis?

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Correct! The intercept on the x-axis is determined by calculating the maximum number of pairs of socks that Sarah can purchase, her income divided by the price of a pair of socks. If the price were to fall, her income would be divided by a smaller number, resulting in an intercept of a larger number of pair of socks. For example, if the price of a pair of socks were $2 instead of $5, the intercept would be I/Px= 50/2 = 25 pairs of socks.
Incorrect. The intercept on the x-axis is determined by calculating the maximum number of pairs of socks that Sarah can purchase, her income divided by the price of a pair of socks. If the price were to fall, her income would be divided by a smaller number, resulting in an intercept of a larger number of pair of socks. For example, if the price of a pair of socks were $2 instead of $5, the intercept would be I/Px= 50/2 = 25 pairs of socks.