Answer to Question #198777 in Microeconomics for Upasana

Question

Indifference curve shape between good and bad

Answer 1

If a commodity is seen to be ‘good,' more of it is desired over less. Indifference curves between two “goods” have a downward slope and are convex to the origin. But when a commodity is a bad' that is, an unpleasant thing for a customer, the more of it he has, the lower his contentment will be. As a result, if a commodity is 'bad,' having less of it is better than having more. Some examples of 'bads' are pollution, risk, tough effort, and disease. The indifference curves for 'bads' have a distinctive form. If a bad (for example, pollution) is shown on the X-axis and a “good” item is plotted on the y-axis, the indifference curve will be upward sloping. A positive slope.

This is because, in this situation, moving to the right along an indifference curve means more pollution, which reduces customer contentment, and so, in order to maintain his level of contentment, the amount of a good item, such as clothes, must be increased. In this scenario, the preferred route is upward and to the left as shown in the figure below.

The figure above shows indifference curves between 'Bad' and 'Good'