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An indifference curve is always?
  • a)
    Concave to the origin
  • b)
    A vertical straight line
  • c)
    Convex to the origin
  • d)
    L-shaped
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
An indifference curve is always?a)Concave to the originb)A vertical st...
In the case of normal goods indifference curve is always convex.
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An indifference curve is always?a)Concave to the originb)A vertical st...
Explanation:
Indifference curves are graphical representations of combinations of two goods that provide the consumer with the same level of satisfaction. These curves exhibit certain characteristics that help us understand consumer preferences.

Convexity to the origin:
- An indifference curve is always convex to the origin. This means that as we move along the curve from left to right, the rate at which the consumer is willing to give up one good in exchange for another diminishes.
- This convex shape indicates that the consumer experiences diminishing marginal rate of substitution between the two goods.

Diminishing marginal rate of substitution:
- The convex shape of an indifference curve reflects the concept of diminishing marginal rate of substitution.
- This means that as the consumer consumes more of one good, they are willing to give up less and less of the other good to maintain the same level of satisfaction.

Utility maximization:
- Convexity of indifference curves is essential for utility maximization.
- At the point where the indifference curve is tangent to the budget constraint, the consumer achieves the highest possible level of satisfaction given their budget constraint.

Graphical representation:
- When drawing indifference curves on a graph, it is important to remember that they are always convex to the origin.
- This convex shape is a fundamental characteristic of indifference curves and helps us understand consumer behavior and preferences.
In conclusion, the convexity of indifference curves is a key feature that allows us to analyze consumer preferences and behavior. It reflects the diminishing marginal rate of substitution and plays a crucial role in utility maximization.
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An indifference curve is always?a)Concave to the originb)A vertical straight linec)Convex to the origind)L-shapedCorrect answer is option 'C'. Can you explain this answer?
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