Indifference curve properties of indifference curve
Answers
An indifference curve is a curve showing the different combinations of two goods, that offers the same level of satisfaction to the consumer.
There are 5 properties.
[Using Good X and Good Y as choices.]
1. The Indifference Curve slopes downward.
The indifference curve slopes downward from left to right, indicating a negative slope. This is because, if the consumer wants to consume a certain number of Good X, he'll have to have lesser units of Good Y. This indicates an inverse relation.
2. The Indifference Curve is convex to the origin.
The indifference curve is convex to the origin, as the slope of the curve tends to diminish. This slope shows the Marginal Rate of Substitution. The MRS tends to diminish.
Let's try and understand this.
If more units of Good X is consumed, his desire for it will eventually decline. This leads to a decrease in the marginal utility. Same is the case with Good Y.
Thus, the indifference curve is convex to the origin because of a diminishing MRS.
3. A higher Indifference Curve shows a higher level of satisfaction.
Obviously, the more quantity/combination of goods, the more level of satisfaction is derived.
4. Indifference Curves do not cross or intersect.
[Refer the diagram attached below.]
If you notice, A and C are points on Indifference Curve 1, whereas C and B are points on Indifference Curve 2. We know that any point on the IC curve shows the same level of satisfaction. This means that A = C and B = C. So we can say that A = B. But this isn't graphically possible as if you notice, more units of Good X is consumed on B than A.
5. The Indifference Curve does not touch the X or Y axis.
If it does touch, it would indicate consumption of a single commodity. We know that an IC curve shows the combination of two commodities.
Indifference curve refers to the graphical representation of various alternative combinations of bundles of two goods among which the consumer is indifferent .
Properties :-
♥ They are always convex to the origin .
♥ They slope downwards .
♥ They represent higher levels of satisfaction .
♥ They can never intersect each other .