0
  • An empty cart

    You have no item in your shopping cart

Enter your keyword

Features of Indifference Curve

Features of Indifference Curve

Following are the features of indifference curve
(a) INDIFFERENCE CURVE ALWAYS SLOPES DOWNWARDS FROM LEFT TO RIGHT
  • An indifference curve has a negative slope, i.e. it slopes downward from left to right.
  • Reason: If a consumer decides to have one more unit of a commodity

(say apples), quantity of another good (say oranges) must fall so that the total satisfaction (utility) remains same.

(a) INDIFFERENCE CURVE IS ALWAYS CONVEX TO THE ORIGIN
  • IC is strictly Convex to origin i.e. MRSxy is always diminishing
  • Reason: Due to the law of diminishing marginal utility a consumer is always willing to sacrifice lesser units of a commodity for every additional unit of another good.
(c) HIGHER INDIFFERENCE CURVE REPRESENTS

HIGHER LEVEL OF SATISFACTION

  • Higher indifference curve represents larger bundles of goods i.e. bundles which contain more of both or more of at least one.
  • It is assumed that consumer’s preferences are monotonic i.e. he always prefers larger bundle as it gives him higher satisfaction.

  • In the diagram, IC1 and IC2 are the two indifference curves. IC2 is the higher indifference curve than IC1.
  • Combination ‘L’ contains more of both goods ‘X’ and Y than combination ‘M’ on IC1. Hence IC2 curve gives more satisfaction

Lets Practise

1. The farther the Indifference curve from the origin, then:
  1. Lower is the satisfaction level
  2. Higher is the satisfaction level
  3. Same satisfaction level will be obtained
  4. None of the above

View answer

Answer: Higher is the satisfaction level

2. What is the shape of IC, when MRS between good X and Y is diminishing?
  1. Straight line
  2. Concave to the origin
  3. Convex to the origin
  4. None of these

View answer

Answer: Convex to the origin

3.Indifference curve shows various possible combinations of two goods that give equal satisfaction to the consumer.
  1. True
  2. False

View answer

Answer: False