From the above discussion one gets that the indifference curves have four basic properties. Let us examine these properties in detail.
- Each point in a commodity space is on an indifference curve. The point on indifference shows the combination of goods say X and Y. The indifference curve are plotted in a specific space is called commodity space.
In commodity space each point represents a bundle of goods and this in turn represents a particular level of satisfaction. Therefore this must be represented on indifference. Thus, there will be an indifference map where each point in X-Y spaces lies on an indifference curve.
2. Indifference curve are negatively sloped from left to right. To remain at the given level of satisfaction, if we increase the units of consumption of one good (say X), we need to decrease the consumption of the other goods (say y). In case this is not done, the bundle of goods will increase and hence the satisfaction level will also increase. It is therefore necessary that in order to remain at the same level of satisfaction, the increasing amount of one good must accompany the decreasing amount of the other goods.
In this figure when we increase the consumption of one commodity without reducing the consumption of other commodity, then we move from P to Q. Q represents more units of X thereby consumer gets higher satisfaction. Hence it is not comparable to P. On the other hand if we move from P to R on a way that the satisfaction level of consumer remains the same. Thus the indifference curve will be downward sloping.
3. Generally convex to the origin of the axis. The third property of indifference curve is that they are generally convex to the origin of the axis. This property of the indifference curve is based on the assumption of diminishing marginal rate of substitution.
In this Fig. The indifference curve is convex from the point of origin-of the axis-o. It shows that BC CU of X substitutes AB Y.
4. A higher indifference curve suggests higher level of satisfaction In the figure given below, points B and C have more of at least one goods (without having less of the other) compared to point A. point B and C therefore present higher utility levels and lie on a higher indifference curve.
5. Indifference curve will never intersect. Indifference curve will never intersect each other. It is because we assume that each IC represents a particular satisfaction to the consumer, it will necessarily be different from other indifference curves representing other satisfaction. This can be proved with the help of Fig.
In this figure we are taking to combinations from IC1 and IC2 If two combinations on the same indifference curve represent equal satisfaction, then we have.
AB = (IC1) AC = (IC2)
BC = C
This is quite obscured. Hence two indifference curves each representing a different satisfaction, should not touch each other or intersect each other.
Thus the properties of indifference curves are as follows:
- Each point in commodity space is on an indifference curve.
- They always downward from left to the right.
- They are generally convex to the point of origin of the axis;
- A higher indifference curve suggests higher level of satisfaction. And
- They never intersect each other.
We can now define an indifference curve thus:
An indifference curve is the locus of various combinations of the two commodities, which yield the same total satisfaction to the consumer.