What is the shape of indifference curve for perfect substitutes?
What is the shape of indifference curve for perfect substitutes?
Indifference curves are linear if the individual regards the two goods as perfect substitutes. They are L-shaped if the individual regards the two goods as perfect complements.
Why are indifference curves 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.
Why are indifference curves drawn convex bowed in to the origin explain this with regard to the marginal rate of substitution?
Indifference curves are convex to the origin because as the consumer begins to increase his or her use of one good over another, the curve represents the marginal rate of substitution. The marginal rate of substitution goes down as the consumer gives up one good for another, so it is convex to the origin.
Why indifference curve is a straight line in case of perfect substitutes?
In case of perfect substitutes, the indifference curves are parallel straight lines. because the consumer equally prefers the two goods and is willing to exchange one good for the other at a constant rate. The greater the decline in marginal rate of substitution, the more the convexity of the indifference curve.
Why are indifference curves downward sloping?
Indifference curves slope downward because, if utility is to remain the same at all points along the curve, a reduction in the quantity of the good on the vertical axis must be counterbalanced by an increase in the quantity of the good on the horizontal axis (or vice versa).
Why are indifference curves bowed outward instead of straight lines?
In general, indifference curves bow in towards the origin, rather than being straight lines or outward-bulging curves. The reason for this is that most people do not like extremes: they would rather have a some shirts and some hats than many hats and no shirts.
When indifference curves are bowed inward the marginal rate of substitution?
Question: When indifference curves are bowed inward, the marginal rate of substitution is Answer: a. increasing as the consumer moves to the right along an indifference curve.
Why are indifference curves convex?
Convexity of indifference curves implies that the marginal rate of substitution of X for Y falls as more of X is substituted for Y. Thus, indifference curves are convex to the origin when principle of diminishing marginal rate of substitution holds good and which is generally the case.
Why does an indifference curve slope downward and why is it bowed towards the origin an indifference curves slopes downward because _______?
5. Answer b. Normal indifference curves slope downward because individuals must be compensated by getting more units of good X when they give up units of good Y.
