State and explain three properties of indifference curves. - Vidyadip

Question

State and explain three properties of indifference curves.

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Answer

Properties of indifference curves (ICs):

Indifference curves slope downwards or negative slope:

The indifference curves slope downwards, left to right, because an increase in the amount of Good X along the indifference curve is associated with a decrease in the amount of Good Y, as the preferences are monotonic.

Slope of indifference curves represents marginal rate of substitution:

Marginal rate of substitution (MRS) is the rate at which a consumer is willing to substitute one commodity for another commodity.
Slope of indifference curve between A and B $=\frac{\Delta\text{Y}}{\Delta\text{X}}=\text{MRS}$
MRS is the rate at which the output of Good Y is sacrificed for every additional unit of Good X.

In an indifference map, higher IC represents higher level of satisfaction:

An indifference map refers to a set of indifference curves. An indifference curve which is to the right and above another shows a higher level of satisfaction to the consumer. Here, $IC_3$ shows higher level of satisfaction than $IC_2$. Thus, the indifference curve relates to a higher level of income of the consumer.

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