Question

‘Higher indifference curve represents higher level of satisfaction.’ Explain.

Hint:

Indifference curves farther from the origin represent higher utility, as they correspond to better combinations of goods.

Answer 1

Step 1: Understand the concept of indifference curve.
An indifference curve represents a set of combinations of two goods that give a consumer the same level of satisfaction or utility. The consumer is indifferent between these combinations.
Step 2: Higher indifference curves.
When an indifference curve shifts to a higher position (i.e., farther from the origin), it represents a higher level of satisfaction because it reflects combinations of goods that provide more of one or both goods, hence increasing total utility.
Step 3: Conclusion.
Thus, a higher indifference curve represents a higher level of satisfaction, as it indicates that the consumer can achieve more of the desired goods while maintaining the same level of utility. Final Answer: \[ \boxed{\text{A higher indifference curve represents a higher level of satisfaction.}} \]