Can indifference curve cross each other? This curve shows how a consumer is indifferent about two different goods that give the same level of satisfaction. It is important to know that two indifferent curves can never intersect, they do not cross. Indifference curves do not cross each other, and they never intersect.
Can indifference curve intersect each other? 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.
Can two indifference curves cross? 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 can’t indifference curves never cross? Indifference curves never intersect, because by definition, all points on the same curve represent equivalent satisfaction. The red data point must have the same utility as the place where the curves cross. The green data point will also have the same utility as the place where the indifference curves intersect.
Can indifference curve cross each other? – Related Questions
What does it mean if indifference curves cross?
Suppose that an individual has indifference curves that cross, as in the case of Curve #1 and Curve #2 above. This implies that the individual is indifferent between combinations A and B and between combinations A and C. The individual is consuming more of both goods at point B than at point C.
Why do consumers prefer higher indifference curves?
Since a higher indifference curve represents a higher level of satisfaction, a consumer will try to reach the highest possible IC to maximize his satisfaction. In order to do so, he has to buy more goods and has to work under the following two constraints: He has to pay the price for the goods and.
What are properties of indifference curve?
The four properties of indifference curves are: (1) indifference curves can never cross, (2) the farther out an indifference curve lies, the higher the utility it indicates, (3) indifference curves always slope downwards, and (4) indifference curves are convex.
Can indifference curves be thick?
The indifference curves cannot be thick because if they are thick, they would be violating the non-satiation assumption.
How can you tell which indifference curves represent higher or lower levels of utility?
An indifference curve is drawn on a budget constraint diagram that shows the tradeoffs between two goods. All points along a single indifference curve provide the same level of utility. Higher indifference curves represent higher levels of utility.
Which assumption would be violated if indifference curves were to cross?
If an indifference curve ran from a to x, then bundle x would be no better than bundle a despite containing more of both goods. This upward slope of the indifference curve would be a violation of the nonsatiation assumption.
Why is indifference curve L shaped?
When two goods are perfect complements, they are represented by a ‘L’ shaped indifference curve.
What is the importance of indifference curve?
The indifference curve technique has come as a handy tool in economic analysis. It has freed the theory of consumption from the unrealistic assumptions of the Marshallian utility analysis. In particular, mention may be made of consumer’s equilibrium, derivation of the demand curve and the concept of consumer’s surplus.
Which of the following is not true of indifference curves?
Answer : Two regular convex to origin indifference curves can intersect each other. This statement is not true because indifference curves can never intersect. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.
Why indifference curve is negatively sloped?
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.
Which indifference curve has an MRS of 0 and infinity?
For perfect substitutes, the MRS will remain constant. Lastly, the third graph represents complementary goods. In this case the horizontal fragment of each indifference curve has a MRS = 0 and the vertical fractions a MRS = ∞.
Do indifference curves have to be parallel?
Thus an indifference curve cannot be a straight line. Thus an indifference curve is always convex to the origin because the marginal rate of substitution between the two goods declines. ADVERTISEMENTS: (8) Indifference curves are not necessarily parallel to each other.
What will be the shape of indifference curve when two goods are 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. The consumer is obsessed with the purchase of only one good. This is called monomania for that good.
Why are indifference curves convex?
Indifference curves are convex to the origin because as the consumer begins to increase his or her use of one good over another, the curve represents the marginal rate of substitution. The reason that the marginal rate of substitution decreases is due to the principle of diminishing marginal utility.
Can an indifference curve cross itself for example could Figure 3.2 depict a single indifference curve?
Can an indifference curve cross itself
Can indifference curve be concave?
The indifference curves are usually convex to the origin. But the possibility of indifference curves being concave to the origin cannot be ruled out in some exceptional cases. Concavity of the indifference curves implies that the marginal rate of substitution of X for y increases when more of X is substituted for Y.
Who gave the concept of indifference curve?
Indifference curve, in economics, graph showing various combinations of two things (usually consumer goods) that yield equal satisfaction or utility to an individual.
Developed by the Irish-born British economist Francis Y.
