Explain three properties of indifference curves.

Solution

Properties of indifference curves (ICs):
(a) Indifference curves slope downwards or negative slope: The indifference curves slope downwards, left to right, because an increase in the amount of Good X along the indifference curve is associated with a decrease in the amount of Good Y, as the preferences are monotonic.
(b) Slope of indifference curves represents marginal rate of substitution:
Marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one commodity for another commodity.

Slope of indifference curve between A and B

equals fraction numerator increment straight Y over denominator increment straight X end fraction equals space MRS

MRS is the rate at which the output of Good Y is sacrificed for every additional unit of Good X.
iii. In an indifference map, higher IC represents higher level of satisfaction:
An indifference map refers to a set of indifference curves. An indifference curve which is to the right and above another shows a higher level of satisfaction to the consumer. Here, IC₃ shows higher level of satisfaction than IC_2. Thus, the indifference curve relates to a higher level of income of the consumer.

Some More Questions From Theory Of Consumer Behaviour Chapter

For Daily Free Study Material Join wiredfaculty

Theory Of Consumer Behaviour

Explain three properties of indifference curves.

Some More Questions From Theory Of Consumer Behaviour Chapter

What is meant by marginal rate of substitution (MRS)?

Why is MRS always diminishing?

When does a consumer attain equilibrium according to indifference curve approach?

Give meaning of demand.

Name two determinants of demand.

List the factors that cause changes in demand.

What is law of demand?

What is demand schedule?

Why does demand curve slope downwards?

Differentiate between substitute and complementary goods.

Mock Test Series

NCERT Sample Papers

Entrance Exams Preparation

Phone Number

Email Address

Location