Properties of Indifference Curve || Theory of Consumer Behavior || Bcis Notes

Properties of Indifference Curve || Theory of Consumer Behavior || Bcis Notes

Properties of Indifference Curve

The main properties of indifference curves are explained below:
1. Indifference Curve Always Slopes Downward from Left to Right: This property follows the assumptions of no- satiety, i.e. the consumer prefers more goods to less of it. The negative slope of the indifference curve shows that the two goods are substitutes for one another. This must be so if the level of satisfaction is to remain the same on the indifference curve. But if the IC had the slope horizontal straight line or vertical line or upwards to the right, then the same level of satisfaction is not attained on such types of curves.
Properties of Indifference Curve || Theory of Consumer Behavior || Bcis Notes
In the figure, the two combinations of commodity ghee and wheat are shown by points A and B on the same indifference curve. The consumer is indifferent towards points A and B as they represent an equal level of satisfaction.
At point A on the indifference curve, the consumer is satisfied with OE units of ghee and OD units of wheat. He is equally satisfied with OF units of ghee and OK units of wheat shown by point b on the indifference curve. It is only on the negatively sloped curve that different points representing different combinations of goods X and Y give the same level of satisfaction to make the consumer indifferent.
2. IC is Convex to Origin: Consumer substitute commodity X for commodity Y, the marginal rate of substitution diminishes of X for Y along an indifference curve.
IC convex to origin
In this figure, the consumer moves from A to, the willingness to substitute X-good for Y-good diminishes. This means that as the amount of good X is increased by equal amounts, that of good Y diminishes by smaller amounts. The marginal rate of substitution of X for Y is the quantity of Y good that the consumer is willing to give up to gain a marginal unit of good X. The slope of the IC is negative. It is convex to the origin.
3. Higher Difference Curve Yields Higher Level of Satisfaction than Lower Ones: The combination of goods which lies on a higher indifference curve will be preferred by a consumer to the combination which lies on a lower indifference curve.
Higher Indifference curves
In this figure, there are three indifference curves, IC1, IC2 and IC3 which represent different levels of satisfaction. The indifference curve IC3 shows a greater amount of satisfaction and it contains more of both goods than IC2 and IC1 (IC3 > IC2 > IC1).
4. Indifference Curves Do not Intersect Each Other: Indifference curves cannot intersect each other because, at the point of tangency, the higher curve will give as much as of the two commodities as is given by the lower indifference curve.
Never intersect each other
In the figure, two indifference curves are showing cutting each other at point B. The combinations represented by points B and F have given equal satisfaction to the consumer because both lies on the same indifference curve IC2. Similarly, the combinations show by points B and E on indifference curve IC1 give equal satisfaction to the consumer. If combination F is equal to combination B in terms of satisfaction and combination E is equal to combination B in satisfaction. It follows that the combination F will be equivalent to E in terms of satisfaction.

These are the main properties of the indifference curve.

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