Indifference Curve

PROPERTIES OF INDIFFERENCE CURVE

by • 24/06/2011 • B.COM PART 1 EconomicsComments (0)533

We note the few properties of indifference curve.

  1. 1. Downward Sloping To The Right Or Negatively Slopped:

An indifference curve slopes downwards from left to right. It is because when the consumer decides to have more units of one of the two goods, he will have to reduce the number of units of the another good, if he is to remain on the same indifference curve.

Looking at the diagram below:


2. Two Indifference Curve Never Intersect Each Other

The second condition of indifference curve is that no two such curves will ever cut each other. It can be explained by the diagram:

In the above diagram C lies on the both indifference curves, which is in turn means that C is equal to both A and B at a time, which represent different level of satisfaction.

3.Convex to the origin

Convexity means we use more and more of good X and Y less and less of good Y. The marginal rate of substitution of x for y goods falling.

As we see that the marginal rate of substitution (MRS) of many for apples falls while the MRS of mangoes for apples remains constant and MRS of mangoes for apples increase which is not happen in general.

Hence it is proved that Indifference Curve is convex to the origin.

4.Higher The Indifference Curve Higher The Level Of Satisfaction:

Higher the indifference curve, higher the satisfaction, and lower the indifference curve, lower the satisfaction.

In the diagram on X-axis goods x and on Y-axis good y is taken. IC1, IC2, IC3 is three different ICs. IC1 gives satisfaction, than IC2. In the same way the satisfaction increases as we move on the higher ICs.

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