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Questions
Discuss any two properties of the indifference curve.
State any two properties of indifference curve.
Solution
(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
