Question

Higher indifference curve represents higher level of satisfaction to the consumer. State the underlying assumption related to this property of indifference curve.

‘Higher indifference curve represents higher level of satisfaction to the consumer’. Explain the statement. Also state the underlying assumption related to this property of indifference curve.

Answer 1

The underlying assumption is non-satiety.

Answer 2

A higher indifference curve represents combinations containing more of one or both goods and therefore gives the consumer greater satisfaction than a lower curve. This conclusion depends on the assumption of monotonic preferences (non-satiation): the consumer prefers more of a good to less, when the quantity of the other good is unchanged.