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Question
Why is an indifference curve convex towards the origin? Explain.
Why is an indifference curve convex towards the origin? Explain.
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Solution
An indifference curve being convex towards origin means that slope of the curve declines as the consumer moves along the curve from left to right. Slope is nothing but Marginal Rate of Substitution which means the number of units of the good on the y-axis, the consumer is willing to sacrifice to obtain one more unit of the good on the X-axis. So convexity means MRS declining as consumer obtains more and more of the good on the X-axis. This is due to the Law of Diminishing Marginal Utility.
An indifference curve being convex towards origin means that slope of the curve declines as the consumer moves along the curve from left to right. Slope is nothing but Marginal Rate of Substitution which means the number of units of the good on the y-axis, the consumer is willing to sacrifice to obtain one more unit of the good on the X-axis. So convexity means MRS declining as consumer obtains more and more of the good on the X-axis. This is due to the Law of Diminishing Marginal Utility.
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