Economics

The 4 Properties of Indifference Curves

The four properties of indifference curves:

  1. Higher indifference curves are preferred to lower ones;
  2. Indifference curves are downward sloping;
  3. Indifference curves do not cross;
  4. Indifference curves are bowed inwards;

indifference curves.png

1st property – Higher indifference curves are preferred to lower ones

This is true because consumers usually prefer more of something to less of it. Where higher indifference curves represent larger quantities of goods than do lower indifference curves.

2nd property – Indifference curves are downward sloping

This is true because a consumer is willing to give up one good only if they get more of the other good in order to remain equally happy. If the quantity of one good is reduced, the quantity of the other good must increase. For this reason, most indifference curves slope downwards.

3rd property – Indifference curves do not cross

This is because points: (A and B), (B and C) should make the consumer equally happy. This implies that A and C would make the consumer equally happy, even though point C has more of both goods compared to point A.

4th property – Indifference curves are bowed inwards

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.


Featured image supplied free from Unsplash.

Copyright © Zoë-Marie Beesley 2016. All Rights Reserved.

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