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Consider the following statements about indifference curves:
1. Indifference curves are convex to the origin.
2. Higher indifference curve represents a higher level of satisfaction.
3. Two indifference curves cut each other.
1. Indifference curves are convex to the origin.
2. Higher indifference curve represents a higher level of satisfaction.
3. Two indifference curves cut each other.
Q. Which of the statements given above is/are correct?
- a)1 only
- b)1 and 2
- c)2 and 3
- d)3 only
Correct answer is option 'B'. Can you explain this answer?
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Consider the following statements about indifference curves:1. Indiffe...
The indifference curves cannot intersect each other. Higher indifference curve represents a higher level of satisfaction because higher IC means a bundle consisting more of both the goods or same quantity of one good n more quantity of the other good. Hence statement 2 is correct and 3 is incorrect. Indifference curves are convex to the point of origin because of Diminishing Marginal Rate of Substitution.
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Consider the following statements about indifference curves:1. Indiffe...
Indifference curves are a graphical representation of the consumer's preferences. They represent all the possible combinations of two goods that provide the same level of satisfaction to the consumer. Let's analyze the given statements:
1. Convexity of indifference curves: An indifference curve is convex to the origin because of the diminishing marginal rate of substitution (MRS). The MRS is the amount of one good that a consumer is willing to give up for one more unit of another good while remaining on the same level of satisfaction. As the consumer moves down the indifference curve, the marginal rate of substitution decreases because the consumer has to give up more and more of one good to get an additional unit of the other good. This leads to a convex shape of the indifference curve.
2. Higher indifference curve represents a higher level of satisfaction: This statement is true because indifference curves are constructed in such a way that the consumer is indifferent between any two points on the same curve. If a consumer is on a higher indifference curve, it means that he/she is getting a combination of goods that provides more satisfaction than the combination on a lower indifference curve.
3. Two indifference curves cut each other: This statement is incorrect. Indifference curves do not intersect or cut each other. If they did, it would imply that the consumer is indifferent between two points on different curves, which is not possible. Indifference curves can only be compared at a point where they touch a common tangent line, which represents the slope of the budget constraint.
Therefore, the correct option is B, i.e., 1 and 2.
1. Convexity of indifference curves: An indifference curve is convex to the origin because of the diminishing marginal rate of substitution (MRS). The MRS is the amount of one good that a consumer is willing to give up for one more unit of another good while remaining on the same level of satisfaction. As the consumer moves down the indifference curve, the marginal rate of substitution decreases because the consumer has to give up more and more of one good to get an additional unit of the other good. This leads to a convex shape of the indifference curve.
2. Higher indifference curve represents a higher level of satisfaction: This statement is true because indifference curves are constructed in such a way that the consumer is indifferent between any two points on the same curve. If a consumer is on a higher indifference curve, it means that he/she is getting a combination of goods that provides more satisfaction than the combination on a lower indifference curve.
3. Two indifference curves cut each other: This statement is incorrect. Indifference curves do not intersect or cut each other. If they did, it would imply that the consumer is indifferent between two points on different curves, which is not possible. Indifference curves can only be compared at a point where they touch a common tangent line, which represents the slope of the budget constraint.
Therefore, the correct option is B, i.e., 1 and 2.
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Consider the following statements about indifference curves:1. Indifference curves are convex to the origin.2. Higher indifference curve represents a higher level of satisfaction.3. Two indifference curves cut each other.Q. Which of the statements given above is/are correct?a)1 onlyb)1 and 2c)2 and 3d)3 onlyCorrect answer is option 'B'. Can you explain this answer?
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