In this article, we will discuss the questions related to the Indifference curve analysis and the related answers in various ways. You can download these questions and answers. Go to the bottom of the article to Download the PDF.

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  • The indifference curve is one of the main tools, which used in this analysis to examine consumer behavior and to derive the low demand.
  • A curve that shows different combinations of to good is called ic curve.
  • Indifference curve refers to a curve that shows the combination of two goods which gives a consumer an equal level of satisfaction.
  • It is a curve which represents various combination of two goods which gives the same satisfaction.
  • It is the curve which shows the combination of two goods which gives equal satisfaction to consumer and, he is in the difference between them.
  • It reveals preference. Represents the different combinations of two goods that provide equal satisfaction to the consumer.
  • It is a curve that shows a different combination of two goods or commodities which give the same level of satisfaction.
  • It is a diagrammatic illustration of goods and services that give the same level of satisfaction.
  • It is a graph that shows the possible combination of two commodities that yield the same level of satisfaction or utilities to consumers.
  • The indifference curve is the curve which shows the combination of two different goods each yielding the same level of satisfaction.
  • An indifference curve is a curve which shows various combination of two goods X and Y that gives the same level of satisfaction to the consumer.
  • A multi-dimensional (usually 2-dimensional) curve that encompasses bundles of goods which a consumer is “indifferent between” or for which utility is assumed constant all along the curve. They are typically downward sloping (upward slope would violate the “more is better” assumption), convex to the origin (diminishing marginal utility), and never intersect with one another (a bundle is assumed to not give two different utilities).
  • Ic is a locus of point particular combination or bundle of goods which yield d same level of satisfaction, to which a consumer remains indifferent to any combination he consumes.
  • A curve which shows various combination of two goods which consumer can buy and, it gives equally satisfaction to him.
  • Ic is the combination of two goods at different level.
  • Curve at which two commodities are identified at a different level having equal satisfaction.

2. What do indifference curves show?

An Indifference curve shows the various commodity combinations which give the same level of satisfaction.

3. Who introduced indifference curve?

Pioneers of this approach are Edgeworth, Fisher, Slutsky, Hicks and Allen.

4. What are the assumptions of indifference curve?

  • Rationality
  • Utility is ordinal
  • The marginal rate of substitution diminishes
  • The utility is a multiplicative function
  • Consistency and transitivity of choice

5. What are the properties of indifference curve?

  • An indifference curve has a negative slope
  • Indifference curve of a rational consumer is convex towards the origin
  • Indifference curves cannot intersect each other
  • The indifference curve doesn’t intersect each other.
  • It’s convex to the origin.
  • It has a negative slope.

It is a graph that shows the various combination of 2 goods with the same or equal satisfaction.

  • Downward(L-R)
  • Convex to the origin
  •  Never Intersect each other

Its locus of a combination of two commodities that give rise to the same level of utility. Properties:

  • They are convex to the origin.
  • The slope downwards from left to right.
  • They never intersect.
  • indifference curve slopes downwards to the right
  • every indifference curve to the right represent a higher level of satisfaction
  • The indifferent curve cannot intersect each other
  • The indifferent curve will not touch the axis
  • indifferent curves are convex in origin

6. Why does indifference curve slope downward?

For a rational consumer, when the quantity of one commodity decrease, the quantity of other commodity must be increased in order to stay on the same level of satisfaction. To satisfy this condition indifference curve must be negatively sloped.

7. Can an indifference curve be concave to the origin?

  • Yes.. but in a special case.
  • Yes. in a situation where a consumer is considered a commodity to be harmful while he can derive maximum satisfaction consuming the other commodity irrespective of its price.
  • No. Indifference curve is convex to the origin due to the diminishing Marginal Rate of Substitution. It shows people will choose to consume less of one good in order to consume more of another. So, it’s convex to the origin.
  • Yes.
  • When the MRS is increasing, the Indifference of ll b concave to the origin. And this happens when you are giving up more good Y to get one additional X.
  • But in the normal sense, an individual being rational ll only agree to forgone less and lesser of Y to obtain one add of X, meaning MRS ll always b decreasing and, Indifference Curve is Convex here.
  • No, IC is always convex due to the trade-off (negative relationship) that exist between the goods in question

8. Is the Indifference curve for cardinalist or ordinalist approach?

  • Ordinal approach because of the measurable commodities.
  • Ordinal approach, indifference curve shows the various combinations of two goods that give the consumer the same level of utility or satisfaction.
  • Ordinal approach

9. ”Indifference curve is convex to the origin” What does it mean?

  • It shows that when we increase the unit of 1st commodity then the unit of 2nd commodity is reduced.
  • It is convex to origin means that it is farther from the point where both axes meet and nearest to both axes at its starting and ending point.
  • One good has more potential than the other to get utility… So consumer shifts accordingly to maintain/maximize the level of utility/satisfaction.
  • that’s because marginal utility( satisfaction) decreased due to consumption of an additional utility as after having 1 the utility decreases to have two.
  • Convex, because of the diminishing marginal rate of substitution.
  • It’s convex because of decreasing MRS.
  • It can never be concave because MRS ideally cannot be increasing.
  • It can be concave, convex, linear, etc., depends upon the nature of preferences.
  • MRS is how much units of one commodity should be sacrifice to heir the units of other commodity is the marginal rate of substitution that’s why we can understand it from the definition that why MRS is diminishing….it is convex to the origin because when the utility of y increases then automatically utility of x will decrease.

10. Why indifference curves cannot intersect each other?

  • This is because if it was happened the point of intersection would imply two different levels of satisfaction, which is impossible.
  • Because of MRS
  • Two baskets of goods can’t yield the same level of satisfaction.
  • Both curves cannot give equal satisfaction to the consumer.
  • The satisfaction of consumer and prize effect.
  • If ic curve intersect then, violate the assumption of transitivity.

11. What is budget line

  • The budget line shows the different combinations of the two commodities that a consumer can purchase, given his money income and prices of goods. This can be defined as the locus of all combinations of two (or more) commodities, which can be purchased with given money income and commodity prices.
  • The budget line shows the available amount of money usually referred to as income for consumption.
  • Ic shows different combinations of 2 commodities that yield equal satisfaction for a consumer.
  • The point where ic is tangent to the budget line. That bundle of the commodity is optimal or best possible for the consumer in the available budget.
  • The budget line shows a combination of two goods that consumers can afford and, it is also called a budget line.IC shows an equal satisfaction locus to the points.
  • The budget line Shows the combination of different commodities at giving income and given prices is called the budget line.
  • Indifference curve: The combination of two different goods which give the same level of satisfaction at every point is called the Indifference curve.
  • The budget line shows how many goods the consumer can afford with his given/limited income IC the combination of different two goods that give an equal level of satisfaction.

12. What is consumer Equilibrium in indifference curve ?

  • A point where IC tanget to Budget constraint
  • when IC is tangent to the budget line of consumer
  • The point where the consumer gets maximum level of satisfaction from the two goods and Ic is tangent to its BL

13. What is indifference map in economics?

The map which includes several indifference curves called ‘the map of indifference curves’. It shows the
ranked preference of the consumer.

14. What Is The Significant Difference Between Isoquant And Indifference Curve

  • Indifference shows utility isoquont shows output
  • IC curve shows satisfaction and Isoquant shows output..IC curve for Consumer and Isoquant for Producer
  • Producers behavior and second Is Consumers behavior

15. Differentiate between Indifference curve and Indifference Map

  • An indifference curve is a curve that shows two commodities like X and y which yield an equal level of satisfaction. A higher indifference curve will be higher utility is call indifference map
  • IC is the combination of two that yields the same Utility to the consumer
  • Combination of different IC curves is called Ic map
  • IC is a curve that shows the combinations of two goods say X and Y that gives equal level of satisfaction for the consumer and the indifference map is a set of indifference curve simply.
  • indifference map indicates the collection of the indifference curve, meaning indifference curve indicates the collection of two commodities that gives the same level of satisfaction or utility but indifference map the collection of indifference curve in the market,
  • an indifference curve is the maximum output combination of two goods that give the consumer the same level of satisfaction such that he is indifference while a set of the indifference curve is the indifference map

16. What is the slope of indifference curve?

  • Marginal rate of substitution [MRS]
  • IC has negative slope = MRSxy
  • MRS. MRS, X for Y is defined as the number of units of commodity Y that must be given up in exchange for an extra unit of X so that the consumer maintains the same level of satisfaction.

17. The demand curve is drived from the indifference curve?

  • Yes from the ordinalist approach of John hicks and Allen not just the indifference curve buth the indifference curve plus budget line And from the cardinality approach of alfred marshall which is the conventional demand curve we know was derived from law of marginal utility plus the constant marginal utility for money
  • The demand curve can be derived from both the indifference map and the price line or budget line
  • Demand curves are derived from both indifference curve and budget line.

18 why Indifference Curves do not Touch the Horizontal or Vertical Axis, and Budget line touch these axis ?

  • Because I.C is about the combination of goods and in budget line, you can spend all the money on one good
  • Because it is two quantity model if it touches the x-axis it means x commodity is zero if it touches the y axis y is zero that is not possible

Further Reading

What is Indifference Curve: Definition, Assumptions, Properties

Consumer equilibrium and indifference curve analysis

Consumer equilibrium and utility analysis

Isoquant curve analysis of production in economics

What is a Budget Line| Definition, Properties, Equation

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