Commerce Exam  >  Commerce Notes  >  Indifference Curves are Convex to the Origin

Indifference Curves are Convex to the Origin - Commerce PDF Download

An indifference curve is always?
  • a)
    Concave to the origin
  • b)
     L-shaped
  • c)
    Convex to the origin
  • d)
    A vertical straight line
Correct answer is option 'C'. Can you explain this answer?

Ref: https://edurev.in/question/625316/An-indifference-curve-is-always-a-Concave-to-the-originb-L-shapedc-Convex-to-the-origind-A-vertical-

This is an important property of indifference curves. They are convex to the origin. As the consumer substitutes commodity X for commodity Y, the marginal rate of substitution diminishes as X for Y along an indifference curve. The Slope of the curve is referred as the Marginal Rate of Substitution. The Marginal Rate of Substitution is the rate at which the consumer must sacrifice units of one commodity to obtain one more unit of another commodity.


Diagram:

Indifference Curves are Convex to the Origin - Commerce


In the above diagram, as the consumer moves from A to B to C to D, the willingness to substitute good X for good Y diminishes. The slope of IC is negative.In the above diagram, diminishing MRSxy is depicted as the consumer is giving AF>BQ>CR units of Y for PB=QC=RD units of X. Thus indifference curve is steeper towards the Y axis and gradual towards the X axis. It is convex to the origin.

If the indifference curve is concave, MRSxy increases. It violets the fundamental feature of consumer behaviour.

If commodities are almost perfect substitutes then MRSxy remains constant. In such cases the indifference curve is a straight line at an angle of 45 degree with either axis.

If two commodities are perfect complements, the indifference curve will have a right angle.

In reality, commodities are not perfect substitutes or perfect complements to each other. Therefore MRSxy usually diminishes.

The document Indifference Curves are Convex to the Origin - Commerce is a part of Commerce category.
All you need of Commerce at this link: Commerce

Top Courses for Commerce

FAQs on Indifference Curves are Convex to the Origin - Commerce

1. What is the concept of indifference curves in commerce?
Ans. Indifference curves in commerce represent the different combinations of two goods that provide the same level of satisfaction to a consumer. It shows the consumer's preferences and helps in analyzing consumer behavior and decision-making.
2. How do indifference curves relate to the origin in commerce?
Ans. Indifference curves are convex to the origin in commerce. This means that the curve is bowed inward towards the origin. It indicates that as the consumer consumes more of one good, they are willing to give up less of the other good to maintain the same level of satisfaction.
3. Why are indifference curves convex to the origin in commerce?
Ans. Indifference curves are convex to the origin in commerce due to the concept of diminishing marginal rate of substitution. As the consumer consumes more of one good, the marginal rate at which they are willing to substitute it for the other good decreases. This leads to the convex shape of the indifference curve.
4. How can we interpret the convexity of indifference curves in commerce?
Ans. The convexity of indifference curves in commerce implies that consumers have a preference for variety and diversity in their consumption. They are willing to trade-off between goods at different rates depending on their initial levels of consumption. This concept helps in understanding consumer choices and market demand.
5. Can indifference curves in commerce ever be concave to the origin?
Ans. No, indifference curves in commerce are always convex to the origin. This is because concave indifference curves would violate the principle of diminishing marginal rate of substitution. If indifference curves were concave, it would imply that consumers are willing to give up more of one good for a smaller increase in the other good, which contradicts rational consumer behavior.
Download as PDF
Explore Courses for Commerce exam

Top Courses for Commerce

Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

Free

,

Indifference Curves are Convex to the Origin - Commerce

,

study material

,

Indifference Curves are Convex to the Origin - Commerce

,

mock tests for examination

,

ppt

,

past year papers

,

Extra Questions

,

pdf

,

Objective type Questions

,

Exam

,

Previous Year Questions with Solutions

,

Summary

,

video lectures

,

MCQs

,

Important questions

,

Sample Paper

,

shortcuts and tricks

,

Viva Questions

,

Semester Notes

,

practice quizzes

,

Indifference Curves are Convex to the Origin - Commerce

;