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