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  • Practice Indifference Curve 1 1. Discuss The Four Properties of Indifference Curve

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    An indifference curve represents combinations of goods that provide equal satisfaction. It has properties of: non-satiation, diminishing marginal rate of substitution, convexity, and no intersection. A budget constraint shows affordable combinations given prices and income. An income increase shifts the budget constraint outward allowing more consumption. A price increase of one good rotates the budget constraint inward, requiring less of that good be consumed.

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    Indifference curve Structure question

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    Indifference Curve

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    An indifference curve represents combinations of goods that provide equal satisfaction. It has properties of: non-satiation, diminishing marginal rate of substitution, convexity, and no intersection. A budget constraint shows affordable combinations given prices and income. An income increase shifts the budget constraint outward allowing more consumption. A price increase of one good rotates the budget constraint inward, requiring less of that good be consumed.

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    18 views2 pages

    Practice Indifference Curve 1 1. Discuss The Four Properties of Indifference Curve

    Uploaded by

    pug
    An indifference curve represents combinations of goods that provide equal satisfaction. It has properties of: non-satiation, diminishing marginal rate of substitution, convexity, and no intersection. A budget constraint shows affordable combinations given prices and income. An income increase shifts the budget constraint outward allowing more consumption. A price increase of one good rotates the budget constraint inward, requiring less of that good be consumed.

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    Practice Indifference Curve 1

    1. Discuss the four properties of indifference curve.

    2. Explain the concept of budget constraint and using a diagram explain the following:
    a) Income increase

    b) Price of 1 good increase

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