Question

what is IC curve and it's features,​

Answer 1

What is Indifference Curve?

It is a graphical presentation of combinations of two goods that give equal satisfaction to the consumer.

Features of Indifference Curve:

The features of indifference curve are as below.

1. IC curve is downward sloping: This is because to gain more of one commodity, some quantity of the other commodity needs to be sacrificed.
2. It is convex to the origin: This is because of decreasing marginal rate of substitution (MRS). It means that, to gain one additional unit of a commodity, more and more of the other commodity needs to be sacrificed.
3. IC never touches the X or Y-axis: This is because it would mean the other commodity is zero, but in IC curve, we study the combinations of two goods to which the consumer is indifferent, or which gives the same satisfaction to the consumer.
4. Two IC curves never intersect each other: This is because two different IC curves can't show the same level of satisfaction.
5. Higher IC curve shows a higher level of satisfaction: A higher IC curve shows a higher level of satisfaction and a consumer always tries to move to a higher IC curve because of Monotonic Preference.

Important terms:

1. Marginal Rate of Substitution: It is the rate at which the commodity on the Y-axis decreases with every gain of every additional unit of the commodity shown on X-axis. It decreases because to gain more and more of good-X, more and more of good-Y needs to be sacrificed.
2. Monotonic Preference: It simply means that the consumer always tries to shift to a higher IC curve because it gives him more satisfaction and he always prefers more of a commodity.

Schedule and Graph

The schedule and graph showing IC curve is given in the attachment, created by me in Excel. It is not a screenshot fom a book or another website.