Define an indifference curve. Explain why an indifference curve is downward sloping from left to right.

Solution

An indifference curve is a graph showing different bundles of goods between which a consumer is indifferent. That is, at each point on the curve, the consumer has no preference for one bundle over another.

In the above figure, IC is the Indifference Curve. Each bundle on the IC shows those combinations of two goods that yield the consumer the same level of satisfaction.
This property implies that an indifference curve has a negative slope. If the preferences are monotonic, an increase in the amount of good: 1 along the indifference curve is associated with a decrease in the amount of good 2. This implies that the slope of the indifference curve is negative. Thus, monotonicity of preferences implies that the indifference curves are downward sloping from left to right.