Yes, the indifference curve can be a straight line if both the goods are perfect substitutes that is both goods provide the same level of satisfaction…
Why are indifference curves not linear?
“Continuous” means infinitely divisible – just like there are infinitely many numbers between 1 and 2 all bundles are infinitely divisible. This assumption makes indifference curves continuous.
What is the shape of a indifference curve?
Indifference curves have a roughly similar shape in two ways: 1) they are downward sloping from left to right; 2) they are convex with respect to the origin. In other words, they are steeper on the left and flatter on the right.
Do indifference curves have to be curved?
An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent. … Typically, indifference curves are shown convex to the origin, and no two indifference curves ever intersect.Can an indifference curve be L shaped?
Indifference curves are linear if the individual regards the two goods as perfect substitutes. They are L-shaped if the individual regards the two goods as perfect complements.
Are indifference curves always downward sloping?
Indifference curves slope downwards. The only way an individual can increase consumption in one good without gaining utility is to consume another good and generate the same amount of utility. Therefore, the slope is downwards sloping. Indifference curves assume a convex shape.
Are indifference curves always convex?
The indifference curves are usually convex to the origin. Convexity of indifference curves implies that the marginal rate of substitution of X for Y falls as more of X is substituted for Y.
What are the limitations of indifference curve analysis?
The indifference curve analysis does not consider speculative demand, interdependence of the preferences of consumers in the form of snob, Veblen and Bandwagon effects, the effects of advertising, of stocks, etc.Why are indifference curves concave?
Indifference curves can be straight lines if a slope is constant, resulting in an indifference curve represented by a downward-sloping straight line. If the marginal rate of substitution is increasing, the indifference curve will be concave to the origin.
Why is indifference curve bowed inward?This is because people are more willing to trade away goods that they have in abundance and less willing to trade away goods of which they have little. These differences in a consumer’s marginal substitution rates cause his or her indifference curve to bow inward.
Article first time published onWhy indifference curve is convex?
Indifference curves are convex to the origin because as the consumer begins to increase his or her use of one good over another, the curve represents the marginal rate of substitution. … The marginal rate of substitution goes down as the consumer gives up one good for another, so it is convex to the origin.
Is indifference curve convex to origin?
The indifference curves are convex to the origin because of the diminishing marginal rate of substitution.
Can indifference curve intersect?
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.
Are L shaped indifference curves convex?
The shape of an indifference curve is convex to the origin and this is based on the principle of diminishing marginal rate of substitution.
When an IC is L shaped then two goods will be?
Solution(By Examveda Team) If two goods are perfect complements then the indifference curves will be L-shaped.
How do you know if an indifference curve is convex?
When a utility function is a function of two variables x and y, an indifference curve is convex to the origin if the derivative of the indifference curves are always negative and the second derivatives are positive.
Can IC curve be concave?
Yes, an indifference curve can be concave. The concave shape of the indifference curve is an exception to the properties of the indifference curve….
Why is indifference curve upward sloping?
When a set of indifference curves is upward sloping, it means one of the goods is a “bad” so that the consumer prefers less of that good rather than more. The positive slope means that the consumer will accept more of the bad only if he also receives more of the other good in return.
Why indifference curve has negative slope?
Answer : An indifference curve always slopes downward from left to right, i.e. it has a negative slope. This is so because if a consumer wants to have more units of one commodity; he will have to reduce the number of units of the other commodity, due to his limited income.
Why do indifference curves have negative slope?
Indifference curves are negatively sloped because for a constant level of utility, if the consumer wants to increase the consumption of one good, she has to reduce the consumption of the other good.
Why are indifference curves convex and downward sloping?
Indifference curves slope downward because, if utility is to remain the same at all points along the curve, a reduction in the quantity of the good on the vertical axis must be counterbalanced by an increase in the quantity of the good on the horizontal axis (or vice versa).
Which of the following is not the assumption of indifference curve?
Constant marginal utility of money is not a assumption of the theory of demand based on analysis of indifference curves.
What is indifference curve and its properties?
Definition: An indifference curve is a convex shaped curve depicting the graphical representation of the different combinations deriving the same level of satisfaction to the consumer by considering two commodities. It functions on the principle of the diminishing marginal rate of substitution (MRS).
What is an indifference curve What are its assumptions?
Assumptions of Indifference Curve Analysis: (1) The consumer acts rationally so as to maximise satisfaction. (2) There are two goods X and Y. (3) The consumer possesses complete information about the prices of the goods in the market.
What is indifference curve write any two properties of indifference curve?
There are four important properties of indifference curves that describe most of them: (1) They are downward sloping, (2) higher indifference curves are preferred to lower ones, (3) they cannot intersect, and (4) indifference curves are convex (i.e. bowed inward).
When indifference curves are bowed inward the marginal rate of substitution?
Question: When indifference curves are bowed inward, the marginal rate of substitution is Answer: a. increasing as the consumer moves to the right along an indifference curve.
Why does Mrs decrease?
Well MRS decline continuously in IC curve because of law of diminishing marginal utility. Means when the consumer consumes more and more of good 1 then his marginal utility from another good keeps on declining and he is willing to give up less and less of good 2 for each good 1. Thats why MRS decline in IC curve.
When can an indifference curve be circular?
If both partials of f are negative, then the indifference curves might become circular. In this case, even though the original utility function has no maximum, there will be a satiation point in the reduced-dimension in difference map diagram.
Why is it called indifference curve?
An indifference curve is a curve that represents all the combinations of goods that give the same satisfaction to the consumer. Since all the combinations give the same amount of satisfaction, the consumer prefers them equally. Hence the name indifference curve.
Can Isoquants cross?
Two isoquants can not intersect each other. An isoquant is convex to its origin point. An isoquant is oval-shaped.
Can indifference curves be thick?
The indifference curves cannot be thick because if they are thick, they would be violating the non-satiation assumption. … Because two combinations having different utility levels cannot be on same indifference curve, it cannot be thick.
