Answer to Question #289940 in Microeconomics for Jonte

Question

Briefly explain two exceptions to the definition of an indifference curve

Answer 1

An indifference curve slopes downward and with a convex shape from the origin. There are two exceptions for this property;

1) For perfect substitutes, the indifference curve is a straight line with a constant slope showing a constant marginal rate of substitution (MRS=1)

2) For complimentary goods the indifference curve has a right angled shape or L- shaped from the origin indicating the marginal rate of substitution to be equal.