Question

Explain any 2 properties of IC curve.

Answer 1

1. They Slope Negatively or Slope Downwards from the Left to the Right:

2. They are Convex to the Origin of Axes:

3. Every Indifference Curve to the right represents Higher Level of Satisfaction than that of the Proceeding One:

4. Indifference Curves can neither touch nor Intersect each other, so that one Indifference Curve Passes through only one Point on an Indifference Map:

5. Indifference Curves are not Necessarily Parallel to each other. Although, they are Falling and Negatively Inclined to the Right:

6. In reality, Indifference Curves are like Bangles:

Explanation:

1. This is an important feature of Indifference Curve. If the total satisfaction is to remain the same, the consumer must part with a diminishing number of bananas as he gets as increasing stock of oranges. The loss of satisfaction to the consumer on account of the downward movement must be made up by the gain through the rightward movement. As such the Indifference Curve must slope downwards to the right.In this diagram at P, the consumer obtains OM of oranges and ON of bananas. AQ, he gets the same OM. Quantity of oranges, but ON1 of bananas. He secures greater total satisfaction of X than at P. He cannot therefore indifferent between P and Q. Thus it is proved that an Indifference Curve cannot slope upward to the right, nor can it be horizontal or vertical. The only possibility is that it must slope downwards to the right. The consumer will get additional supplies of oranges by sacrificing diminishing quantities of bananas.

2.The second property of the Indifference Curve is that they are generally convex to the origin of the axes—the left hand portion is normally steep while the right hand portion is relatively flat. This property of the Indifference Curve is derived from the Law of Diminishing Marginal Rate of Substitution. The marginal rate of substitution neither increases nor does it remain constant.  If the marginal rate of substitution had increased, the Indifference Curve would have been concave to the origin. If the marginal rate of substitu­tion had remained constant, the Indifference Curve would have been a diagonal straight line at 45° angle. The marginal do not rate of substitution increases nor does it remain constant. The marginal rate of substitu­tion on the contrary goes on diminishing. So the Indifference Curve has to be convex to the origin of axes.