Answer to Question #182942 in Economics for Nooreh

Question

Explain why the indifference curves of one individual cannot intersect. Clearly state the axioms that underly this outcome.

Answer 1

Lines of indifference represent a set of points that reflect alternative combinations of two products that bring the same satisfaction, and the choice of which the buyer is indifferent. The quantity of goods X is plotted along the abscissa, and the quantity of goods Y is plotted along the ordinate. Provided that sets A and B for a given consumer are equal, then the points reflecting these sets will be on the same indifference curve.

The indifference curve has a negative slope, or in other words, a downward slope. This is due to the fact that both products are useful for the consumer, but at the same time, the condition is met that an increase in consumption of product X is inevitably accompanied by a certain reduction in product Y, leading to the maintenance of the general level of utility. Consequently, the more X, the less Y. Since there is feedback between these values, it should graphically appear as a descending line with a negative slope. The absolute slope of the indifference curve decreases as you move along it to the right and down.

Indifference curves in the overwhelming majority of cases are convex to the origin, which means that they become flattered as the consumption of one of the goods grows. This property follows the law of diminishing marginal utility.

Two indifference curves cannot have a common point, since one set of goods cannot be characterized by two different levels of utility.