Answer the Following Question. Discuss Any Two Properties of the Indifference Curve. - Economics

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Short Note

Answer the following question.
Discuss any two properties of the indifference curve. 

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Solution

(i) An indifference curve (IC) always slopes downward: This property implies that to increase the consumption of X-good, the consumer has to reduce the consumption of Y good so as to remain at the same level of satisfaction.

As shown in the given diagram:
To increase the quantity of ‘X’ good from OX to OX1, the consumer has to reduce good Y from OY to OY1.

(ii) Indifference curves are convex to the origin: This property is based on the principle of diminishing marginal rate of substitution. It implies that as the consumer substitutes X for Y, the marginal rate of substitution between them goes on diminishing as shown in the following figure.

AB > CD > EF or Diminishing MRS

Concept: Properties of Indifference Curve
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2014-2015 (March) Set 1
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