1.

Write down the main characteristics of indifference curve.

Answer»

The main characteristics of indifference curve are the following:
(i) Indifference Curve has a Negative Slope : The negative slope of an indifference curve implies that the two goods are substitutes for one another. Therefore, if quantity of one commodity decreases, quantity of the other commodity must increase if the consumer has to stay at the same level of satisfaction.

(ii) Indifference Curves are Convex to Origin : The convexity of indifference curves implies :

(a) That the two goods are important substitutes for one another.
(b) That the marginal rate of substitution between the two goods decreases as a consumer moves along an indifference curve.

(iii) Indifference curves do not intersect nor are tangent to one another.


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