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There are 4 basic assumptions for indifference curve
1. Analysis is restricted to goods that yield positive marginal utility, or simply, more is better.
2.Marginal rate of substitution, MUx/MUy, or the ratio at which a household is willing to substitute Y for X. As you consume more of X and less of Y, X becomes less valuable in units of Y
3. Consumer have the ability to choose among the combination of goods and services available.
4. Consumer choices are consistent with a simple postulate of rationality. if A consumer prefer A to B and B to C , then when confronted consumer will prefer A to C as well.
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Why indifference curves are always negatively sloped?
its something to do with a non satiation assumption. ie if all the bundles on the indifference curve are "goods" (actively wanted products) then the indifference curve slopes downward from L to R. if there is a "good" and a "bad" on the curve then it will be positively sloped. (upward from L to R)
What is the different between indifference map and indiffirence curve?
Indifference curve is a curve that shows consumption bundles that give the consumer the same level of satisfaction. Indifference map, on the other hand Indifference curve is a graph of two or more indifference curves.
Features of indifference curve?
two indifference curve never cut each other..
Can a single indifference curve cross itself?
a single indifference curve cannot cross itself.
What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
Why indifference curves are always negatively sloped?
its something to do with a non satiation assumption. ie if all the bundles on the indifference curve are "goods" (actively wanted products) then the indifference curve slopes downward from L to R. if there is a "good" and a "bad" on the curve then it will be positively sloped. (upward from L to R)
What is the different between indifference map and indiffirence curve?
Indifference curve is a curve that shows consumption bundles that give the consumer the same level of satisfaction. Indifference map, on the other hand Indifference curve is a graph of two or more indifference curves.
Features of indifference curve?
two indifference curve never cut each other..
Can a single indifference curve cross itself?
a single indifference curve cannot cross itself.
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 major characteristics of an indifference curve?
The three major characteristics of an indifference curve are: 1. They are negatively sloped 2. They are convex to the origin 3. Indifference curve cannot be intersected
Explain the consumer equilibrium with the help of indifference curve?
Explain the consumer equilibrium with the help of indifference curve?
what is the indifference curve for two goods with imperfect substitutes?
the indifference curve has its usual negatively sloping shape
Is the height of an indifference curve the marginal rate of substitution?
Yes. The height of an indifference curve is the marginal rate of substitution.
Slope of indifference curve?
indifference curves slopes downward to the right
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.
Why does an indifference curve never meet?
No indifference curve can intersect because all points on indifference curve are ranked equally prefered and ranked either or less more prefered than every other point on the curve.rt
