Properties of Indifference curve

(1) Indifference Curves Slope Downward from Left to Right:

Indifference curves have a negative slope. This property shows that any increase in the
amount of one commodity is accompanied by a reduction in amount of other commodity. This
property is derived from the assumption that both the commodities have positive marginal
utilities. Addition to total utility on account of more of one commodity, say, ‘X’ should be
compensated by equivalent reduction in total utility by a reduction in the quantity of other
commodity, say, ‘Y’ .

In this way, the total utility or satisfaction will remain the

same, which is consistent with the definition of an
indifference curve. Other possibilities for the shape of an
indifference curve (horizontal, vertical, upward sloping,
etc.) are ruled out on the ground as these will imply
different levels of satisfaction at different points on the
curve. Let us now explain these… Figure 1

• If an indifference curve were horizontal, this would mean that the consumer is indifferent
between two combinations (say, ‘A’ and ‘B’ in following Fig.2 a) both of which contain
the same amount of ‘Y’ but combination ‘B’ has a greater amount of ‘X’ than
combination ‘A’.

• Similarly, if an indifference curve were vertical, this would mean that the two
combinations ‘A’ and ‘B’ with equivalent satisfaction level have the same amount of ‘X’,
but ‘B’ contains more ‘Y’ than ‘A’.
• Further, if an indifference curve were upward, this would mean that combinations ‘A’
and ‘B’ yield same total satisfaction to the consumer, though combination ‘B’ contains
more amount of commodity ‘X’ as well as ‘Y’.
 A

Figure 2

AAll the above three situations are contrary to the definition of indifference curves that
all points on such curves provide same level of satisfaction to the consumer. In these three
situations, the level of satisfaction of the consumer rises, as he moves from point ‘A’ to point ‘B’
rightwards (Fig. 1 (a)) or upwards (Fig. 1 (b), (c)), since he starts consuming more of at least one
commodity with such movement, Therefore, indifference curve cannot be horizontal or vertical.
Nor can it slope upward to the right. The only possibility, therefore, is that it must slope
downwards to the right.

(2) Indifference Curves are Convex to Origin:

Indifference curves are convex to the point of origin of the two axes, i.e., in the
neighborhood of the point of tangency, the indifference curve must lie above the tangent line.
The curve is relatively steep at first in its left hand portion and tends to become flatter in its right
hand portion.

Thus, as we move along the curve from left downwards to the right, the absolute slope of the
indifference curve decreases. This property of
indifference curve is based on the principle of
diminishing marginal rate of substitution, explained
in the previous section.

In Side Fig.3, as the consumer reduces the

consumption of commodity ‘Y’ and increases the
consumption of commodity ‘X’, his urge for more

Figure 3
units of ‘X’ declines continuously. On the other hand, he is willing to leave/sacrifice with fewer
and fewer units of commodity ‘Y’ at each stage to obtain each additional unit of ‘X’. In other
words, the marginal rate of substitution of ‘X’ for ‘Y’ declines, as the consumer moves down on
an indifference curve.

Suppose, ‘A’,’B’,’C’, and ‘D’ are four points on indifference curve IC in above Fig. 3. Initially,
the consumer is willing to sacrifice Y1 Y2 units of commodity ‘Y’ to get one unit X, X2 of
commodity ‘X’. For additional one unit X2X3 of ‘X’, he is ready to sacrifice Y2 Y3 units of ‘Y’.
For next one unit X3 X4 of ‘X’, the consumer would like to give up only Y3 Y4 units of ‘Y’
clearly; the increase in ‘X’ commodity is uniform, whereas ‘Y’ commodity is decreasing at a
diminishing rate. Symbolically,

X1X2=X2X3 = X3X4, while, Y1Y2 > Y2Y3 > Y3Y4

Hence, indifference curves are convex to the origin. Concavity of the indifference curves is
against the principle of diminishing marginal rate of substitution. Let us consider the following
Fig. 4 which indicates a concave indifference curve. According to this figure, a consumer is
prepared to sacrifice more and more units of commodity ‘Y’ at each stage to acquire additional
units of commodity ‘X’.

At point ‘A’ in the figure, the consumer

possesses 1 unit of ‘X’ and OY, units of ‘Y’.
To obtain 1 more unit of ‘X’, he is willing to
give up Y1 Y2 units of ‘Y’ to acquire further
additional units of ‘X’; he is ready to part
with Y2 Y3, Y3 Y4 units of ‘Y’ and so on.
Clearly Y1 Y2 < Y2 Y3 < Y3 Y4, so a situation Figure 4

of increasing marginal rate of substitution has arisen. Such situation is against general consumer
behaviour and implies that as the stock of ‘Y’ diminishes and that of ‘X’ increases, the marginal
utility of ‘Y’ should fall. As a result, the consumer would be willing to sacrifice larger and larger
units of ‘Y’ to obtain each additional unit of ‘X’. Thus, indifference curves cannot be concave to
the origin.
(3) Two Indifference Curves cannot Touch or Intersect Each Other:
Intersection of two indifference curves representing different levels of satisfaction is a logical
contradication. It would mean that indifference curves representing different levels of
satisfaction are showing the same level of satisfaction at the point of intersection or contact (Fig.
5).

Figure 5

We can prove this property of indifference curves through contradiction. Suppose, two
indifference curves IC1 and IC2 meet (Fig. 5.(a)), intersect (Fig. 5.(b)) or touch (Fig. 5. (c)) each
other at point ‘A’ in Fig. 5. Point ‘C’ is taken just above point ‘B’, such that it contains same
amount of commodity ‘X’ and more amount of commodity ‘Y’ Consider points ‘B’ and ‘A’ on
IC1 Consumer is indifferent between these points, as both lie on the same indifference curve IC .
Further, points ‘A’ and ‘C’ lie on the same indifference curve IC implying same level of
satisfaction to the consumer.
Now, by the assumption of transitivity, points ‘B’ and ‘C’ yield same level of satisfaction to the
consumer. But, point ‘C’ lies on a higher indifference curve having more amount of commodity
‘Y’. It must be preferred to point ‘B’ by the assumption of non-satiety.

Further, intersection of two indifference curves also violates the assumption of positive marginal
utilities of the two commodities. In Fig. 5, intersection of IC1 and IC2 means additional amount
of BC has zero utility. Therefore, indifference curves can never intersect or touch each other.

(4) Higher Indifference Curves Represent Higher Level of Satisfaction:

An indifference curve, which is nearer to the point of origin represents smaller combinations of
the two commodities, while an indifference curve farther from the point of origin represents
larger combinations.

Larger combinations of the two commodities provide greater satisfaction than the smaller
combinations of the same commodities. Therefore, greater is the distance of an indifference
curve from the point of origin, higher it will be in the consumer’s preferential order. In other
words, indifference curve that lies above and to the right of another indifference curve denotes
preferred combinations of commodities and thus yields higher satisfaction.

In Fig. 6, the consumer would prefer to lie on indifference curve IC2 rather than indifference
curves IC1 though he is indifferent between all points on
IC1 or IC2. Points ‘B’, ‘C’ or any point between them on
indifference curve IC2 have more of at least one good
without having less of the other compared to point ‘A’
on indifference curve IC1.
Therefore, these points on indifference curve
IC2 represent higher satisfaction levels. Since all points
on an indifference curve represent same level of
Figure 6
satisfaction, so all points on IC2 imply higher satisfaction
as compared to all points on IC1. Thus, higher indifference curve suggests higher satisfaction
level.

(5) Indifference Curves need not be parallel to Each Other:

The distance between two indifference curves need not be the same on an indifference map. This
is an account of three reasons. First, indifference curves are not based on measurable cardinal
utility.

Secondly, the marginal rate of substitution for two commodities may not be the same for
different indifference curves. Further, the indifference curves have no width and every point in
the commodity space has indifference curve through it.

Composed by Dr. Bikash Saha