Q:
Consider the following statements about indifference curves:
1. Indifference curves are convex to the origin.
2. Higher indifference curve represents higher level of satisfaction.
3. Two indifference curves cut each other.Which of the statements given above is/are correct?
Answer & Explanation
Answer: B) 1 and 2
Explanation: The indifference curves cannot intersect each other.
Higher indifference curve represents a higher level of satisfaction because higher IC means a bundle consisting more of both the goods or same quantity of one good n more quantity of the other good .Hence statement 2 is correct and 3 is incorrect.
Indifference curves is convex to the point of origin because of diminishing Marginal Rate of Substitution.
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