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:
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.
1. What is the concept of indifference curves in commerce? |
2. How do indifference curves relate to the origin in commerce? |
3. Why are indifference curves convex to the origin in commerce? |
4. How can we interpret the convexity of indifference curves in commerce? |
5. Can indifference curves in commerce ever be concave to the origin? |
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