Question

Draw consumer indifference curve.

Hint:

An indifference curve shows all combinations of two goods that give a consumer the same level of satisfaction. The further the curve from the origin, the higher the satisfaction.

Answer 1

An indifference curve represents a graphical depiction of different combinations of two goods that provide the consumer with the same level of satisfaction or utility. The consumer is indifferent to which combination of goods they choose, as both combinations lead to the same level of utility. Below are the key properties of an indifference curve:
Step 1: Properties of Indifference Curve.
- Downward Sloping: Indifference curves generally slope downward, indicating that if a consumer has more of one good, they are willing to give up some of the other good to maintain the same level of satisfaction.
- Convex to the Origin: Indifference curves are convex to the origin, reflecting the principle of diminishing marginal rate of substitution, i.e., as a consumer consumes more of one good, the amount of the other good they are willing to give up decreases.
- Do Not Intersect: Indifference curves do not intersect, as this would imply that a consumer derives different levels of satisfaction from the same combination of goods, which contradicts the premise of indifference curves.
- Higher Curves Represent Higher Satisfaction: Indifference curves that lie further from the origin represent higher levels of satisfaction.
Step 2: Graphical Representation.
Here is the graphical representation of an indifference curve:
(Include a typical downward sloping convex curve diagram in Overleaf for illustration.)