Online Classes for Economics-Notes-Properties of Indifference Curve
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We are also bringing to you some theoretical knowledge in the form of these blogs and write ups. One of the blog carries detailed information about ‘Properties of Indifference Curve’.
PROPERTIES OF INDIFFERENCE CURVE
An indifference curve may be defined as a schedule which represents all those bundles of goods that give the equal level of satisfaction to the consumer and he is indifferent to all these bundles of goods.
- An Indifference Curve Slopes Downwards From Left To Right:
An indifference curve slope, always from left to right, which means it is negatively sloped.
This is because of a simple reason that in case the consumer is willing to have more units of one good, he will have to reduce the consumption of another good, if his level of satisfaction remains unchanged. In other words, an indifference curve sloped downwards due to monotonic preferences of the consumer.
- An Indifference Curve Is Convex To The Origin:
The indifference curve is convex to its origin because of the diminishing Marginal Rate Of Susbstitution. Marginal rate of substitution of good 1 for good 2 is the number of units of good 2 that the consumer is willing to give up for an additional unit of good 1, so as to maintain the same level of satisfaction.
- Every Indifference Curve To The Right Represents Higher Level Of Satisfaction:
The indifference curve on the right depicts a higher level of satisfaction than the left side indifference curve. Thus, as we move towards the right, the level of satisfaction also rises. Hence, IC2 represents a higher level of satisfaction than IC1 since it lies on the right IC1. A set of indifference curves that indicate different levels of satisfaction is called Indifference Map.
- Two Indifference Curves Never Intersect Each Other:
Two indifference curves represent different levels of satisfaction. If we assume that two indifference curves cut each other at point B. The point of intersection must indicate different levels of intersection since it lies on both the indifference curves which is impossible. Hence, it is concluded that two ICs can never intersect each other.
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