What does it mean to be on the same indifference curve?

Definition: An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

Are the indifference curves of various individuals the same?

Each person determines his or her own preferences and utility. Thus, while indifference curves have the same general shape—they slope down, and the slope is steeper on the left and flatter on the right—the specific shape of indifference curves can be different for every person.

Can two indifference curves have the same utility?

Key Concepts and Summary. 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.

What happens when two indifference curves meet?

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. Similarly the combinations shows by points B and E on indifference curve IC1 give equal satisfaction top the consumer.

What do you mean by Cardinal utility?

Cardinal Utility is the idea that economic welfare can be directly observable and be given a value. For example, people may be able to express the utility that consumption gives for certain goods. In other words, the value of cardinal utility is related to the price we are willing to pay.

Why is IC downward sloping?

i Indifference Curve Slopes Downwards :because in order to consume more units of X good the consumer must give up some quantity of Y good so that consumer remains on the same level of satisfaction at each of an indifference curve.

What is equal at all points along an indifference curve for an individual consumer?

An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent. Along the curve, the consumer has an equal preference for the combinations of goods shown—i.e. is indifferent about any combination of goods on the curve.

Can indifference curve touch either axis?

An indifference curve cannot touch either axis. If it touches X-axis, as I2 in Figure 6 at U, the consumer will be having OM quantity of good X and none of Y. An indifference curve is convex to the origin. The convexity rule implies that as the consumer substitutes X for Y, the marginal rate of substitution diminishes.

Can two indifference curves intersect explain your answer quizlet?

Explain why two indifference curves cannot intersect. more is preferred to less. But this violates transitivity, so indifference curves must not intersect.

What is cardinal measurement?

Cardinal measurement of utility refers to the measurement (or expression) of utility in terms of units like 2, 4, 6 and 8. Cardinality means that utility can be measured in numbers.

What is the difference between cardinal and ordinal?

Cardinal numbers tell ‘how many’ of something, they show quantity. Ordinal numbers tell the order of how things are set, they show the position or the rank of something.

Why IC is convex?

Answer: IC is convex to the origin, this property of IC based on the principle of Diminishing marginal rate of substitution.It means that as the units of x is increased by equal methods, the y diminishes by smaller amounts.

Why do indifference curves not cross each other?

If more resources become available, or if the consumer’s income rises, higher indifference curves are possible, or curves that are farther away from the origin. Indifference curves do not cross each other and they never intersect.

Do consumers prefer higher or lower indifference curves?

The figure above, consisting of three indifference curves speculates the view that a consumer is indifferent to the combinations of products on the same indifference curve. Also, a consumer, say Samaira, would prefer the combinations on the higher indifference curve to the ones on the lower curves.

What does it mean if the graph is on the curve?

If the graph is on the curve or line, then it means that the consumer has no preference for any goods, because all the good has the same level of satisfaction or utility to the consumer. For instance, a child might be indifferent while having a toy, two comic book, four toy trucks and a single comic book.

What is the difference between IC1 and IC2 curve?

In fig, IC 2 is higher and IC 1 is a lower indifference curve. Point B on IC 2 curve represents more units of rice than point A on IC 1. Although the units of wheat remain same in both combinations. Hence, point B represents more satisfaction than point B. Thus, a higher indifference curve implies higher satisfaction.