Answer to Question #284029 in Economics for Hafsa

Question

What does a community indifference curve measure? What are its characteristics? What does the slope of an indifference curve measure? Why does it decline as the nation consumes more of the commodity measured along the horizontal axis? 

Answer 1

A community indifference curve is an illustration of different combinations of commodity quantities that would bring a whole community the same level of utility. The model can be used to describe any community, such as a town or an entire nation.

The slope of the indifference curve is known as the MRS. The MRS is the rate at which the consumer is willing to give up one good for another. If the consumer values apples, for example, the consumer will be slower to give them up for oranges, and the slope will reflect this rate of substitution.