Question

Define an indifference curve.

What is Indifference Curve?

Answer 1

Definition: An indifference curve shows all the possible combinations of two goods that provide a consumer with the same level of satisfaction or utility.

Characteristics:

• Downward sloping (negative slope)
• Convex to the origin (reflecting diminishing marginal rate of substitution)
• Do not intersect each other

Example: If a consumer is equally satisfied with 3 apples and 2 bananas or 2 apples and 3 bananas, these points will lie on the same indifference curve.