Question

why are indifference curves convex to the origin (a) two goods are perfect complementary goods (b) two goods are imperfect substitute (c) two goods are perfect substitute (d) none of the above​

Answer 1

Answer:

Explanation:

Option B is correct

Indifference curves are always convex to the origin in case of imperfect substitutes such as food and clothing. It is observed that as more and more unit of food is substituted for another unit of clothing, the consumer is willing to part with less and less of the commodity being substituted i.e. clothing in our case. In simple words, consumer has more units of food and he is prepared to forego less and less units of clothing. This is called diminishing marginal rate of substitution. This marginal rate of substitution gives convex shape to the indifference curves.