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Figure 4.13 Indifference Curves for the Absence of a “Bad”
An economic “bad” can be converted into a “good.” By changing the economic bad of a house’s “increased age” into the economic good of a house’s “newness,” we can have two goods that our homeowner desires and produce typical downward-sloping, convex indifference curves. The homebuyer’s utility increases with either an increase in the number of bedrooms in a house or an increase in the house’s newness.