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Question
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.
Solution
Downward sloping straight line.
Assume that the marginal rate of substitution remains constant and the indifference curve would be a straight line sloping downward because of perfect substitution of goods. For example, Bru coffee is a perfect substitute for Nescafe coffee. Here, the consumer’s satisfaction would remain the same in the consumption of both Bru coffee and Nescafe coffee.
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RELATED QUESTIONS
Explain the three properties of the indifference curves.
Define an indifference curve.
Why is an indifference curve negatively sloped? Explain.
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
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?
Identify the correct pair of items from the following Columns I and II:
| Columns I | Columns II |
| (1) Demand Curve | (a) Downward sloping |
| (2) Indifference curve | (b) Upward rising |
| (3) Marginal Utility Curve | (c) L shaped curve |
| (4) Total Utility Curve | (d) Y shaped curve |
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.
"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:
Observe the graph given below and answer the question that follow.
- Give a reason to explain if the graph shown above can be a common phenomenon or not. [2]
- What is an indifference map? Draw its diagram. [2]
- State any two differences between cardinal utility and ordinal utility. [2]
Points K and T will NOT be attained by the consumer. Select the reason from the options given below.
Will you defend or refute the case depicted in the following diagram? Provide a rationale in support of your view.
