Why is indifference curve convex to origin Mcq?
Why is indifference curve convex to origin Mcq?
(b) An indifference curve is convex to the origin because of diminishing marginal rate of substitution.
Can indifference curves be convex?
Along the curve, the consumer has an equal preference for the combinations of goods shown—i.e. is indifferent about any combination of goods on the curve. Typically, indifference curves are shown convex to the origin, and no two indifference curves ever intersect.
Can indifference curve be concave to the origin?
If the marginal rate of substitution is increasing, the indifference curve will be concave to the origin. This is typically not common since it means a consumer would consume more of X for the increased consumption of Y (and vice versa).
Why is an indifference curve convex to the origin and downward sloping?
ii Indifference Curve is convex to the origin : Because it is assumed that Marginal Rate of Substitution falls continuously as the consumer moves downwards along the curve. It is due to the Law of Diminishing Marginal Utility.
What is convex to the origin?
“Mathematically, a ‘convex to the origin’ curve is described by saying that if A and B are any two points on the curve, then a ray passing through the origin O and any point X on the line segment AB will meet the curve at most at one point D between O and X”.
When two goods are perfect substitutes the indifference curve is convex to the origin Mcq?
Solution(By Examveda Team) Indifference curves are convex to the origin because two goods are imperfect substitutes.
When the shape of an indifference curve is convex then it implies?
(Strictly) convex. With (2), convex preferences imply that the indifference curves cannot be concave to the origin, i.e. they will either be straight lines or bulge toward the origin of the indifference curve.
Why must indifference curves be convex rather than concave?
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 is the indifference curve convex to origin quizlet?
A particular indifference curve reflects a constant level of utility, so the consumer is indifferent among all consumption combinations along a given curve. Combinations are equally attractive. Because of the law of diminishing marginal rate of substitution, indifference curves bow in toward the origin.
What will be the shape of indifference curve when two goods are 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.
Who introduced indifference curve approach?
Francis Y. Edgeworth
Developed by the Irish-born British economist Francis Y. Edgeworth, it is widely used as an analytical tool in the study of consumer behaviour, particularly as related to consumer demand.
Why are indifference curves bowed towards origin?
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.
Can an indifference curve be concave?
However, when the indifference curves are concave consumer’s equilibrium will inevitably be a corner solution. This implies that more of commodity X a consumer has the more useful or significant in terms of satisfaction an extra unit of it becomes.
What is the slope of an indifference curve?
The slope of the indifference curve is known as the MRS, or the marginal rate of substitution. Stated simply, the MRS is the rate at which the consumer is willing to give up one good for another.
What is indifference curve theory?
Indifference curve. In microeconomic theory, an indifference curve is a graph showing different bundles of goods between which a consumer is indifferent. That is, at each point on the curve, the consumer has no preference for one bundle over another.
What is a linear indifference curve?
Answer : Linear indifference curves are indifference curves that have the same slope every- where — i.e. indifference curves with constant rather than diminishing MRS . Thus, the MRS cannot depend on x 1 or x 2 for the indifference curve to be linear — which is the case only for u B ( x 1 , x 2 ).
