Answer to Question #94442 in Macroeconomics for Elements of indifference curve

Question

What are the elements of indifference curve

Answer 1

Indifference curve refers to a curve which shows combination of two goods that are equivalent to each other. It explains consumer behavior as an alternative to the utility analysis by representing the combination of goods that yield same satisfaction level to the consumer. It is based on three assumptions which are non-satiety, transitivity, and diminishing marginal substitutability. The elements of indifference curve are;

They are downward sloping: All the indifference curves virtually have negative slope. They slope from left to the right.

Higher ones are preferred to lower ones: The consumers usually prefer indifference curves which are lower compared to those which are higher. This is because of the basic assumption in economics that more is always better than lower.

They cannot intersect: Two indifference curves do not cross. This is because, if they cross each other, it means that they provide same level of satisfaction.

They are convex: Indifference curves in most cases bow inward. This is due to the marginal rate of substitution.