Question

Answer the following question.
Discuss any two properties of the indifference curve. 

Answer 1

(i) An indifference curve (IC) always slopes downward: This property implies that to increase the consumption of X-good, the consumer has to reduce the consumption of Y good so as to remain at the same level of satisfaction.

As shown in the given diagram:
To increase the quantity of ‘X’ good from OX to OX₁, the consumer has to reduce good Y from OY to OY₁.

(ii) Indifference curves are convex to the origin: This property is based on the principle of diminishing marginal rate of substitution. It implies that as the consumer substitutes X for Y, the marginal rate of substitution between them goes on diminishing as shown in the following figure.

AB > CD > EF or Diminishing MRS