Q13 of 50 Page 1

Explain three properties of indifference curves.

Indifference curve is the locus of all points among which the consumer is indifferent.

The three properties of indifference curves are:


a) An indifference curve is convex to the origin to the marginal rate of substitution decreases as more of one good is consumed.


b) An indifference curve slopes downward from left to right because to consume more of good X, a consumer has to reduce his consumption of good Y so that the utility level remains the same.


c) An indifference curve to the right represents a higher level of satisfaction because it shows more units of goods consumed. Moreover, more units are consumed to have more utility.


More from this chapter

All 50 →
11

When the price of a commodity falls from ` 12 per unit to ` 9 per unit, the producer

supplies 75 per cent less output. Calculate the price elasticity of supply.

 12

Why do the central problems of an economy arise? Explain the central problem of “for whom to produce”?

 14

Examine the effect of (a) fall in the own price of good X and (b) rise in the tax rate on good X, on the supply curve. Use diagrams.

 14

For blind candidates in lieu of Q. No 14.


Examine the effect of (a) fall in the own price of good X and (b) rise in the tax rate on good X on the supply of a good. Use schedule.