Propreties of indifference curves

amir

1. Presented By: Hafiz Muhammad Amir BB14017 Case study By: Shahzad Ahmad BB14043

2. What is Indifference Curves ? An Indifference Curve can be defined as the locus of various combinations of quantities of two goods each of which offers the same level of satisfaction( Utility, U) to the consumer to the extent that the consumer turns indifferent in between any two of them Reference: Microeconomics by S.S.S Chauhan Publisher: PHI learning Page # 140

3. Properties of Indifference Curves:- An Indifference Curve Slopes Down. Indifference Curves Can Not Cross Each Other. Indifference Curves Can not Be Thick. Indifference Curves are convex to the Origin. Higher Indifference Curve Represents Higher Level of Satisfaction. Indifference Curves never intersect the axes.

4. Indifference Curves Are Down sloping An indifference Curve slopes downward more of one product means less of the other total utility is to remain unchanged. Reference: Economics written by Campbell R. McConnell 19 th eddition Page # 238

5. Indifference Curves can not cross each other 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 . Reference: Microeconomics written by: D.N Dwivedi Publisher: Pearson

6. Indifference Curves Can not Be Thick It is difficult to draw It would not be rational.

7. Indifference Curves are convex to the Origin. Can never be straight line. Can never be concave to the origin. because of the rate of substitution. Reference: Principles of Economics written by : H.L. AHUJA Publisher: S.Chand Page # 204

8. Higher Indifference Curve Represents Higher Level of Satisfaction Each indifference curve has different level of satisfaction. Higher indifference curve has higher the level of satisfaction. Lower indifference curve has lower level of satisfaction. Reference: Economics written by : G.S.Maddala, Ellenn Miller Publisher: TATA McGRAW HILL page # 102

9. Indifference Curves never intersect the axes 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 . Reference : Microeconomics by S.S.S Chauhan Publisher: PHI learning Page # 146

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