Q.Explain the properties of indifference curve.

An indifference curve shows all combinations of two goods that give the consumer equal satisfaction. Its properties are: it slopes downward to the right, it is convex to the origin due to a diminishing marginal rate of substitution, two indifference curves cannot intersect, a higher curve means greater satisfaction, and it never touches the axes.

Meaning

Under the ordinal (Hicks and Allen) approach, satisfaction cannot be measured in numbers but can be ranked. An indifference curve is the locus of points, each showing a different combination of two goods, among which the consumer is indifferent because every combination yields the same total satisfaction. A set of such curves is an indifference map.

Properties of an indifference curve

• Indifference curves slope downward from left to right: To keep satisfaction constant, a consumer who takes more of one good must give up some of the other, so the curve has a negative slope.
• Indifference curves are convex to the origin: This is because of the diminishing marginal rate of substitution — as the consumer gets more of one good, the amount of the other good he is willing to give up for an extra unit falls.
• Two indifference curves never intersect each other: If they did, a single point would show two different levels of satisfaction, which is impossible and contradictory. …