question_answer

Define an indifference curve. Explain why an indifference curve is downward sloping from left to right.

Answer:

Indifference curve is a curve that depicts various combinations of two goods that provides a consumer with the same level of satisfaction.

In the above figure, IC is the Indifference Curve. Each bundle on the IC shows those combinations of two goods that yield the consumer the same level of satisfaction.

An indifference curve is downward sloping from left to right. It implies that a consumer cannot simultaneously have more of both the goods. An increase in the quantity of one good is associated with the decrease in the quantity of the other good. This is in accordance with the assumption of monotonic preferences.