Q.Explain the properties of indifference curve.

An indifference curve joins all combinations of two goods giving a consumer equal satisfaction. Its four key properties are: it slopes downward, it is convex to the origin, two such curves never cut each other, and a higher curve means higher satisfaction.

Meaning

An indifference curve is the locus of points, each representing a different combination of two goods, among which the consumer is indifferent because every combination gives him the same total satisfaction. A set of such curves is called an indifference map.

Properties

1. Indifference curves slope downward from left to right

To keep satisfaction constant, if the consumer takes more of one good he must give up some of the other. Hence the curve has a negative slope. It can never be horizontal, vertical or upward sloping.

2. Indifference curves are 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 additional unit of X.

3. Two indifference curves never intersect each other

If two curves cut each other, the point of intersection would mean two different levels of satisfaction equal to the same point, which is contradictory. Therefore indifference curves cannot intersect.

4. A higher indifference curve represents a higher level of satisfaction

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