Answer to Question #291530 in Macroeconomics for Nalyn

Question

89. Outline and explain two characteristics of indifference curves.

Answer 1

Outline and explain two characteristics of indifference curves.

1. The curves of indifference slant downward to the right.

Indifference curves have a distinguishing trait in this context. When the amount of one product in the combination is raised, the amount of the other commodity is decreased, as indicated by the sloping-down indifference curve. If the amount of satisfaction is to remain constant on the same indifference curve, this must be the case.

2. A higher degree of satisfaction is represented by each indifference curve to the right.

Every indifference curve to the right of the preceding curve represents a higher degree of contentment, while the curve to the left represents a lower level of satisfaction. This suggests that an indifference curve with a higher degree of pleasure from the axes is more satisfying than one with a lower level of satisfaction.

3. They are convex to the origin

The fact that indifference curves are convex to the origin and cannot be concave to the origin is a crucial property. The origin of a normal indifference curve is convex, and it cannot be concave. The idea of Diminishing Marginal Rate of Substitution can only be applied to convex curves. In the event of a concave curve, this will result in an increase in the marginal rate of substitution, which is difficult to achieve.

4. At no point do indifference curves cross. If they could cross, there would be a lot of uncertainty about what the true utility is.