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Que : 82. Write the main characteristics of Indifference curves. |
Answer: 1. Indifference curves are always convex to origin - an difference curve is covex to origin because of diminishing MRS. MRS declines continuously because of the law of dimishing marginal utility. 2. Indifference curve slope downwards - it implies that as a consumer consumes more of one good, he must consume less of the other good. it happens because if the consumer decide to have more units of one good, he will reduce the number of units of another good, so that total satisfaction remains the same. 3. Higher indifference curve represents higher level of satisfaction - higher indifference curve represent higher large bundle of goods, which means more utility because of monotonic preference. 4. Indifference curve can never intersect each other - as two indifference curves cannot represent the same level of satisfaction they cannot intersect each other. |
