Yes, the indifference curve can be a straight line if both the goods are perfect substitutes that is both goods provide the same level of satisfaction…
Do indifference curves have to be curved?
An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent. … Typically, indifference curves are shown convex to the origin, and no two indifference curves ever intersect.
Why indifference curve is linear curve for perfect substitutes?
If two goods X and Y are perfect substitutes, the indifference curve is a straight line with negative slope, as shown in Figure 41 because the MRSXY is constant. … In this case, the consumer does not distinguish between these two goods and regards them as the same commodity, such as two brands of tea.
Can an indifference curve be L shaped?
Indifference curves are linear if the individual regards the two goods as perfect substitutes. They are L-shaped if the individual regards the two goods as perfect complements.Why are indifference curves not linear?
“Continuous” means infinitely divisible – just like there are infinitely many numbers between 1 and 2 all bundles are infinitely divisible. This assumption makes indifference curves continuous.
Are indifference curves always convex?
The indifference curves are usually convex to the origin. Convexity of indifference curves implies that the marginal rate of substitution of X for Y falls as more of X is substituted for Y.
Are indifference curves always downward sloping?
Indifference curves slope downwards. The only way an individual can increase consumption in one good without gaining utility is to consume another good and generate the same amount of utility. Therefore, the slope is downwards sloping. Indifference curves assume a convex shape.
What are the limitations of indifference curve analysis?
The indifference curve analysis does not consider speculative demand, interdependence of the preferences of consumers in the form of snob, Veblen and Bandwagon effects, the effects of advertising, of stocks, etc.How do you determine the shape of an indifference curve?
Shape of an Indifference Curve Indifference curves have a roughly similar shape in two ways: 1) they are downward sloping from left to right; 2) they are convex with respect to the origin. In other words, they are steeper on the left and flatter on the right.
Why are indifference curves concave?Indifference curves can be straight lines if a slope is constant, resulting in an indifference curve represented by a downward-sloping straight line. If the marginal rate of substitution is increasing, the indifference curve will be concave to the origin.
Article first time published onCan indifference curve intersect?
The indifference curves cannot intersect each other. It is because at the point of tangency, the higher curve will give as much as of the two commodities as is given by the lower indifference curve. … We, therefore, conclude that indifference curves cannot cut each other.
Which goods have L shaped indifference curves?
If two goods are perfect complements then the indifference curves will be L-shaped.
Why indifference curve has negative slope?
An indifference curve always slopes downward from left to right, i.e. it has a negative slope. This is so because if a consumer wants to have more units of one commodity; he will have to reduce the number of units of the other commodity, due to his limited income.
Why is indifference curve bowed inward?
This is because people are more willing to trade away goods that they have in abundance and less willing to trade away goods of which they have little. These differences in a consumer’s marginal substitution rates cause his or her indifference curve to bow inward.
What does a flatter indifference curve mean?
If the indifference curve (or slope) is flat, then the MRS is low. This means the consumer is willing to give up very little good y for an additional unit of good x.
Why is indifference curve upward sloping?
When a set of indifference curves is upward sloping, it means one of the goods is a “bad” so that the consumer prefers less of that good rather than more. The positive slope means that the consumer will accept more of the bad only if he also receives more of the other good in return.
Why do indifference curves slope downwards to the right?
The indifference curves must slope down from left to right. This means that an indifference curve is negatively sloped. It slopes downward because as the consumer increases the consumption of X commodity, he has to give up certain units of Y commodity in order to maintain the same level of satisfaction.
Can indifference curves be thick?
The indifference curves cannot be thick because if they are thick, they would be violating the non-satiation assumption. … Because two combinations having different utility levels cannot be on same indifference curve, it cannot be thick.
How do you know if an indifference curve is convex?
When a utility function is a function of two variables x and y, an indifference curve is convex to the origin if the derivative of the indifference curves are always negative and the second derivatives are positive.
Can IC curve be concave?
Yes, an indifference curve can be concave. The concave shape of the indifference curve is an exception to the properties of the indifference curve….
Why does indifference curve always convex to its origin?
Indifference curves are always convex to the origin because of the diminishing marginal rate of substitution.
What is the shape of indifference curve and why?
Description: Graphically, the indifference curve is drawn as a downward sloping convex to the origin. The graph shows a combination of two goods that the consumer consumes.
Which of the following is not the assumption of indifference curve?
Constant marginal utility of money is not a assumption of the theory of demand based on analysis of indifference curves.
Who gave the indifference curve analysis?
Developed by the Irish-born British economist Francis Y. Edgeworth, it is widely used as an analytical tool in the study of consumer behaviour, particularly as related to consumer demand.
Why are indifference curves convex and downward sloping?
Indifference curves slope downward because, if utility is to remain the same at all points along the curve, a reduction in the quantity of the good on the vertical axis must be counterbalanced by an increase in the quantity of the good on the horizontal axis (or vice versa).
Can Isoquants cross?
Two isoquants can not intersect each other. An isoquant is convex to its origin point. An isoquant is oval-shaped.
On which approach indifference curve analysis is based?
As indifference curve theory is based on the concept of diminishing marginal rate of substitution, an indifference curve is convex to the origin.
When two goods are perfect complements the shape of indifference curve is?
When two products are perfect complements, the indifference curve is a right angle.
When Mrs is increasing the shape of indifference curve is?
If the marginal rate of substitution is increasing, the indifference curve will be concave to the origin as in Fig. 7(A). In the case of perfect complementaries MRS is zero, and the indifference curve I, is L shaped as in Fig.
Can indifference curves have a positive slope?
When a set of indifference curves is upward sloping, it means one of the goods is a “bad” in that the consumer prefers less of the good rather than more of the good. The positive slope means that the consumer will accept more of the bad good only if she also receives more of the other good in return.
Which indifference curve represents highest level of satisfaction?
Higher indifference curve represents higher level of satisfaction. In other words, any combination of goods which lie on a higher indifference curve represents higher level of satisfaction as consumer is able to buy more of goods on a higher IC.
