Define indifference curve discuss the important properties of it.
Answers
Answer:
Definition:- An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.
Properties:-
(1) They are downward sloping-
•Indifference curve being downward sloping means that when the amount of one good in the combination is increased, the amount of the other good is reduced. This must be so if the level of satisfaction is to remain the sameon an indifference curve.
(2) higher indifference curves are preferred to lower ones-
•The second property of indifference curve is that a higher indifference curve will represent a higher level of satisfaction than a lower indifference curve. In other words, the combinations which lie on a higher indifference curve will be preferred to the combinations which lie on a lower indifference curve.
(3) they cannot intersect-
•Third important property of indifference curves is that they cannot intersect each other.
(4) indifference curves are convex. (i.e. bowed inward)-
•Last important property of indifference curves is that they are usually convex to the origin. In other words, the indifference curve is relatively flatter in its right-hand portion and relatively steeper in its left-hand portion.
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