Draw a consumer’s indifference curves for wine and cheese
Draw a consumer’s indifference curves for wine and cheese. Describe and explain four properties of these indifference curves.
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An indifference curve shows different combinations of two goods preferred by a consumer, each of which provides the consumer with the same amount of satisfaction.
The horizontal axis measures the quantity of cheese in pounds and the vertical axis measures the quantity of wine (glasses). The indifference curves for wine and cheese are as follows:
The four major properties of indifference curves are:
Higher indifference curves are preferred to lower ones: Higher quantity of goods provide higher satisfaction to consumers. Since higher indifference curves provide a greater amount of both commodities, the levels of satisfaction increases with higher indifference curves.
Indifference curves slope downward: The slope of an indifference curve measures the rate at which the consumers are willing to give up one good to obtain another good, which is also known as the marginal rate of substitution (MRS). This is so because, given the budget constraint, consumption of one good has to be reduced in order to increase the consumption of the other.
Indifference curves do not intersect each other: If two indifference curves cross each other, it would lead to violation of the assumption that higher indifference curves are preferred to lower ones since, at the point of intersection, both the indifference curves will show the same level of satisfaction, which is impossible.
Indifference curves are convex to the origin, meaning they are bowed inward: This is because consumers are willing to give up more of that good which is in abundance than the good that is scarce with the individual.
Indifference curves are as follows:
The four properties are as follows:
Higher indifference curves are preferred to lower ones.
Indifference curves slope downward.
Indifference curves do not intersect.
Indifference curves are convex to the origin, meaning they are bowed inward.