Question

Indifference curves are those which

• A. Are circular in shape
• B. Are concave in shape
• C. Do not intersect each other
• D. Always touches both X and Y axes

Hint:

Remember the four properties of Indifference Curves:
1. Slopes downward from left to right.
2. Convex to the origin.
3. Higher IC represents higher utility.
4. Two ICs can never intersect.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
An indifference curve (IC) is a graph showing various combinations of two goods that give the consumer equal satisfaction and utility.
Because every point on the curve represents the same level of utility, the consumer is indifferent between them.
Indifference curves have several key properties based on standard consumer preferences.

Step 2: Detailed Explanation:
Let us evaluate the properties of indifference curves:
1. Convex to the origin:
Indifference curves are typically convex to the origin (not concave, Option B), which reflects the Law of Diminishing Marginal Rate of Substitution (MRS).
As the consumer gets more of Good X, they are willing to give up less and less of Good Y to get additional units of X.
2. Do not intersect each other (Option C):
This is a fundamental property of indifference curves.
If two indifference curves intersected, it would violate the assumption of transitivity in consumer preferences.
For example, if $IC_1$ and $IC_2$ intersect at point A, then point A would represent two different levels of utility simultaneously, which is logically impossible.
Therefore, two indifference curves can never intersect or touch each other.
Thus, this statement is correct.
3. Do not touch the axes:
Under standard assumptions, a consumer purchases at least some amount of both goods.
Therefore, an indifference curve does not touch either the X-axis or the Y-axis (Option D), as touching an axis would mean the consumption of one good is zero.

Step 3: Final Answer:
A key property of indifference curves is that they do not intersect each other.
Therefore, the correct option is (C).