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Questions
Define an indifference curve.
What is Indifference Curve?
Solution 1
An indifference map refers to a set of indifference curves which represent consumer preferences over all the bundles of two goods. An indifference curve shows all the combinations which create the same level of satisfaction. We can present an indifference curve with the high or low level of satisfaction, i.e. to the right and above another show a higher level of satisfaction to the consumer. Here, IC3 shows the higher level of satisfaction than IC2. Thus, the indifference curve also relates to a higher level of income of the consumer. However, all these curves have the same level of satisfaction.
Solution 2
An indifference curve shows all the combinations which create the same level of satisfaction. We can present an indifference curve with the high or low level of satisfaction, i.e. to the right and above another show a higher level of satisfaction to the consumer. Here, IC3 shows the higher level of satisfaction than IC2.
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RELATED QUESTIONS
Explain the conditions of consumer’s equilibrium using indifference curve analysis.
Explain the three properties of the indifference curves.
Why is an indifference curve negatively sloped? Explain.
If Marginal Rate of Substitution is constant throughout, the Indifference curve will be :(choose the correct alternative)
a. Parallel to the x-axis.
b. Downward sloping concave.
c. Downward sloping convex.
d. Downward sloping straight line.
If Marginal Rate of Substitution is increasing throughout, the Indifference Curve will be: (Choose the correct alternative)
a. Downward sloping convex
b. Downward sloping concave
c. Downward sloping straight line
d. Upward sloping convex
A consumer consumes only two goods. If the price of one of the goods falls, the indifference curve: (Choose the correct alternative)
a. Shifts upwards
b. Shifts downwards
c. Can shift both upwards or downwards
d. Does not shift
Explain why is an indifference curve is Convex.
Define an indifference map. Why does indifference curve to the right show more utility? Explain.
What are the properties of indifference curves?
Assertion (A): A lower indifference curve represents a higher level of satisfaction.
Reason (R): According to the Indifference Curve Approach, utility is an ordinal concept, that is, it can be ranked and not measured.
Which of these is not a property of indifference curve?
"Higher indifference curve represents fewer quantities of one or both goods, a higher indifference curve shows higher utility level." Choose the correct option for the above mentioned statement:
Identify the correct pair of items from the following Columns I and II:
| Column I | Column II |
| (1) Monotonic Preferences | (a) Consumer preferences are called monotonic when between any three bundles, consumers always choose a bundle having more of one good and no less of other goods. |
| (2) Indifference Set | (b) It is a set of those divisions of two goods that offer the consumer the same level of satisfaction so that the consumer is indifferent across any number of combinations in his indifference set. |
| (3) Indifference Curve | (c) It is a curve showing the different combinations of two goods, each combination offering the same level of satisfaction to the consumer. |
| (4) Indifference Map | (d) It refers to a set of indifference curves placed in different diagrams for the same type of goods. |
Indifference curve is:
Will you defend or refute the case depicted in the following diagram? Provide a rationale in support of your view.
