Properties Indifference curve

Properties of an Indifference curve:

1. Indifference curves slope downs to the right.

2. Indifference curves are convex to the source.

3. No two indifference curves can yet cut each other.

Each indifference curves slope downs from left to right. The downward slope of indifference curve should be attributed to the fact that the consumer in replacing good X by good Y raises the amount of Y and decreases the amount of X. When the indifference curves were horizontal line running parallel to X axis then the combination that it symbolizes has similar amount of Y however more and more of X. In that situation the satisfaction from the combination will not be equivalent. For similar reason, it can be said that indifference curve will not be vertical.

All indifference curves are convex to the source. This is since of the operation of a principle termed as ‘Diminishing Marginal Rate of Substitution’. The indifference curves depend on this principle. When they are concave to the source, then it will mean that MRS is rising. Indifference curve can’t be straight line except whenever the goods are perfect substitutes.

2446_indifference curve property1.jpg

Figure: Indifference curves slopes downwards

Marginal rate of replacement among X and Y refers to the amount of commodity Y to be provided in exchange for one unit of X commodity. The MRS goes on retreating as consumer goes on replacing X for Y.

The third supposition is that no two indifference curves can ever cut each other. However in figure below we discover that two indifference curves do cut each other.


424_indifference curve property2.jpg

Figure: No two indifference curves intersect each other

Point A that is on indifference curve 2 symbolizes a higher level of satisfaction to the consumer than at point B that is on indifference curve 1. However point C lies on both curves. That means, two levels of satisfaction A and B that are unequal have become equivalent. That can’t be accepted. Therefore indifference curves can never cut each other.

These are the three suppositions about the shape of indifference curve.


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