Q. 1. answer all the questions: (i) "two indifference curves cannot touch or intersect each other". Explain why?
Answers
Explanation:
Indifference curves are graphs that represents various combinations of two commodities which an individuals considers equally valuable. The axes of those graphs one commodity each. (eg good A and good B).
It is impossible for two indifference curves to cross. To understand why this is the case, we can look at what would happen if they did intersect. As we know, all combinations of good A and good B that lie on the same indifference curve make the consumer equally happy. Therefore if two indifference curves were to cross, they would both have to provide the consumer with the same level of satisfaction, because the exact point where they intersect (i.e point A) is on both curves. Thus, all other combinations on both curves would have to provide the same level of satisfaction as well. However, if we compare point B and point C, we can clearly see that point C offers more of good A and good B(90 and 140) as compared to point B ( 80 and 130). As we already learned above, consumers always prefers large quantities. Therefore it is impossible for both curves to provide the same level of satisfaction, which means they can never intersect.
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