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What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
What are the characteristics of indifference curve?
1) Concave down. 2) Always decreasing. 3) Represents a fixed utility value (and therefore can never intersect another indifference curve). 4) Is considered equally optimal any where on the curve. 5) The lower the indifference curve is, the less optimal it is. The optimal indifference curve is the one furthest away from the origin.
How to draw an indifference curve showing income consumption curve for normal goods?
When income of consumer incresing this will lead the indifference curve to shift out ward in case for normal goods.So incresing in income of consumer it lead to incresing the purchasing power of consumer or consumer will demand much goods.
What is the relationship between the indifference curve and perfect substitutes?
The relationship between the indifference curve and perfect substitutes is that in the case of perfect substitutes, the indifference curve is a straight line. This means that the consumer is equally satisfied with either good and is willing to trade one for the other at a constant rate.
What happens to the marginal rate of substitution as you move along a convex indifference curve?
The MRS measures how much of a good you are willing to give up in exchange for one more unit of the other good, keeping utility constant. The MRS diminishes along a convex indifference curve in that as you move down along the indifference curve, you are willing to give up less and less of the one good in exchange for the other. The MRS is also the slope of the indifference curve, which increases (becomes less negative) as you move down along the indifference curve. The MRS is constant along a linear indifference curve, since in this case the slope does not change. The consumer is always willing to trade the same number of units of one good in exchange for the other.
What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
What are the characteristics of indifference curve?
1) Concave down. 2) Always decreasing. 3) Represents a fixed utility value (and therefore can never intersect another indifference curve). 4) Is considered equally optimal any where on the curve. 5) The lower the indifference curve is, the less optimal it is. The optimal indifference curve is the one furthest away from the origin.
How to draw an indifference curve showing income consumption curve for normal goods?
When income of consumer incresing this will lead the indifference curve to shift out ward in case for normal goods.So incresing in income of consumer it lead to incresing the purchasing power of consumer or consumer will demand much goods.
What is the relationship between the indifference curve and perfect substitutes?
The relationship between the indifference curve and perfect substitutes is that in the case of perfect substitutes, the indifference curve is a straight line. This means that the consumer is equally satisfied with either good and is willing to trade one for the other at a constant rate.
What happens to the marginal rate of substitution as you move along a convex indifference curve?
The MRS measures how much of a good you are willing to give up in exchange for one more unit of the other good, keeping utility constant. The MRS diminishes along a convex indifference curve in that as you move down along the indifference curve, you are willing to give up less and less of the one good in exchange for the other. The MRS is also the slope of the indifference curve, which increases (becomes less negative) as you move down along the indifference curve. The MRS is constant along a linear indifference curve, since in this case the slope does not change. The consumer is always willing to trade the same number of units of one good in exchange for the other.
Definitions of indifference curve by j r hicks?
Indifference curve is locus of point of one combination of two product consume by consumer. To make satisfaction constant consumer if increase one product he have to sacrifice other product unit.
Is it possible to have thick indifference curves?
Indifference curves are not supposed to have any thickness to them at all. It would not be rational if an indifference curve had thickness to it. It is supposed to look like a really thin pancake with only one side.
How to draw a butt?
you make one curve. then you make another curve. presto? you have a butt.
Give details that why an Indifference Curve is not concave?
Because of diminishing marginal rate of substitution, which is the principle that the more of one good a consumer has, the more they are willing to give up for an additional unit of the other good. Therefore the indifference curve must get flatter as we go along it
Why an indifference curve has a negative slope?
As quantity consumed of one good (X) increases, total utility (satisfaction) would increase if not offset by a decrease in the quantity consumed of the other good (Y). Satisfaction, or utility must be offset so that at each point on the curve 'indifference' is retained.
How the indifference curve and budget line apparatus are used to derive a consumer's demand curve?
Indifference curve: series of curve reflecting the preference structure of the individual. Budget constraint: the material resource constraint the individual faces in choices. The demand curve, being inherently designated as rational, seeks to maximise utility. Thus, in a Walrasian equilibrium, the consumer construct his demand curve at the points where his contract curve equals to his budget constraint (or, in mathematical terms, when the constraint and optimal indifferences are tangent to one another). These tangencies construct a curve which is the individual's demand function.
Describe the characteristics of indifference curve?
Properties/Characteristics of Indifference Curve:Definition, Explanation and Diagram:An indifference curve shows combination of goods between which a person is indifferent. The main attributes or properties or characteristics of indifference curves are as follows:(1) Indifference Curves are Negatively Sloped:The indifference curves must slope down from left to right. This means that an indifference curve is negatively sloped. It slopes downward because as the consumer increases the consumption of X commodity, he has to give up certain units of Y commodity in order to maintain the same level of satisfaction.In fig. 3.4 the two combinations of commodity cooking oil and commodity wheat is shown by the points a and b on the same indifference curve. The consumer is indifferent towards points a and b as they represent equal level of satisfaction.At point (a) on the indifference curve, the consumer is satisfied with OE units of ghee and OD units of wheat. He is equally satisfied with OF units of ghee and OK units of wheat shown by point b on the indifference curve. It is only on the negatively sloped curve that different points representing different combinations of goods X and Y give the same level of satisfaction to make the consumer indifferent.(2) Higher Indifference Curve Represents Higher Level:A higher indifference curve that lies above and to the right of another indifference curve represents a higher level of satisfaction and combination on a lower indifference curve yields a lower satisfaction.In other words, we can say that the combination of goods which lies on a higher indifference curve will be preferred by a consumer to the combination which lies on a lower indifference curve.In this diagram (3.5) there are three indifference curves, IC1, IC2 and IC3 which represents different levels of satisfaction. The indifference curve IC3 shows greater amount of satisfaction and it contains more of both goods than IC2 and IC1 (IC3 > IC2 > IC1).(3) Indifference Curve are Convex to the Origin:This is an important property of indifference curves. They are convex to the origin (bowed inward). This is equivalent to saying that as the consumer substitutes commodity X for commodity Y, the marginal rate of substitution diminishes of X for Y along an indifference curve.In this figure (3.6) as the consumer moves from A to B to C to D, the willingness to substitute good X for good Y diminishes. This means that as the amount of good X is increased by equal amounts, that of good Y diminishes by smaller amounts. The marginal rate of substitution of X for Y is the quantity of Y good that the consumer is willing to give up to gain a marginal unit of good X. The slope of IC is negative. It is convex to the origin.(4) Indifference Curve Cannot Intersect Each Other:Given the definition of indifference curve and the assumptions behind it, the indifference curves cannot intersect each other. It is because at the point of tangency, the higher curve will give as much as of the two commodities as is given by the lower indifference curve. This is absurd and impossible.In fig 3.7, two indifference curves are showing cutting each other at point B. The combinations represented by points B and F given equal satisfaction to the consumer because both lie on the same indifference curve IC2. Similarly the combinations shows by points B and E on indifference curve IC1 give equal satisfaction top the consumer.If combination F is equal to combination B in terms of satisfaction and combination E is equal to combination B in satisfaction. It follows that the combination F will be equivalent to E in terms of satisfaction. This conclusion looks quite funny because combination F on IC2 contains more of good Y (wheat) than combination which gives more satisfaction to the consumer. We, therefore, conclude that indifference curves cannot cut each other.(5) Indifference Curves do not Touch the Horizontal or Vertical Axis:One of the basic assumptions of indifference curves is that the consumer purchases combinations of different commodities. He is not supposed to purchase only one commodity. In that case indifference curve will touch one axis. This violates the basic assumption of indifference curves.In fig. 3.8, it is shown that the in difference IC touches Y axis at point C and X axis at point E. At point C, the consumer purchase only OC commodity of rice and no commodity of wheat, similarly at point E, he buys OE quantity of wheat and no amount of rice. Such indifference curves are against our basic assumption. Our basic assumption is that the consumer buys two goods in combination.
