Q.Explain the properties of indifference curve.

An indifference curve joins combinations of two goods giving equal satisfaction. Its main properties are: it slopes downward to the right, it is convex to the origin (diminishing marginal rate of substitution), a higher curve means higher satisfaction, two indifference curves never cut each other, and a curve does not touch either axis.

Meaning

An indifference curve is a locus of points, each showing a different combination of two goods, that yield the same total satisfaction to the consumer. Since satisfaction is equal everywhere on the curve, the consumer is indifferent among all the combinations on it.

Properties of an indifference curve

1. Downward sloping from left to right: To keep satisfaction constant, if the consumer takes more of one good he must give up some of the other, so the curve has a negative slope.

2. Convex to the origin: The curve bends towards the origin because of the diminishing marginal rate of substitution. As the consumer gets more of good X, he is willing to give up less and less of good Y for each extra unit of X.

3. A higher indifference curve represents a higher level of satisfaction: A curve farther from the origin contains larger combinations of both goods and therefore gives greater satisfaction.

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