(a) Because Michaela receives utility from both the number of friends in her apartment building and the square footage of her apartment, she is equally happy with 10 friends in her building and a 500-square-foot apartment or 5 friends in her building and a 750-square-foot apartment. Likewise, she is willing to trade off 2 more friends in her building (leaving her with 3) to have a 1,000-square-foot apartment. These are three of many combinations of friends in her building and apartment size that make her equally happy.
(b) An indifference curve connects all bundles of goods that provide a consumer with the same level of utility. Bundles A, B, and C provide the same satisfaction for Michaela. Thus, the indifference curve represents Michaela’s willingness to trade off between friends in her apartment building and the square footage of her apartment.