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The effectiveness of using indifference curves to illustrate the functioning of an economic system depends on the assumption that

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User Gogol
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1 Answer

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the consumer is rational and has consistent preferences. In other words, the consumer is able to make informed decisions and is not subject to biases that would affect their choices. Additionally, the assumption is made that there are no external factors that would affect the consumer's choices, such as income, taxes or government regulations. These assumptions allow for the use of indifference curves to predict the behavior of consumers in a given economic system.
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User JDMX
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