Answer to Question #89227 in Microeconomics for Areesha sajid

Question

Should that indifference curves are (a) convex to the original (b) cannot intersect one another? What behavioral assumptions must be true in each case.

Answer 1

a)     Indifference curves are convex to the origin due to the diminishing marginal rate of substitution. As a consumer substitutes one commodity for the other, the marginal rate of substitution diminishes as one moves along the curve.

b)     Indifference curves cannot intersect because different curves indicate different levels of consumer satisfaction. Therefore, if they intersect, the point of intersection will depict equality in satisfaction levels along the two curves while the satisfaction levels are different on other points along the two curves.