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Unit 4: Consumer Behaviour (Utility Analysis)
4.3.2 Properties of Indifference Curve Notes
Indifference curves have the four basic characteristics:
1. Indifference curves have a negative slope
2. Indifference curves are convex to the origin
3. Indifference curves do not intersect nor are they tangent to one another
4. Upper indifference curves indicate a higher level of satisfaction.
These characteristics or properties of indifference curves, in fact, reveal the consumer’s behaviour,
his choices and preferences. They are, therefore, very important in the modern theory of consumer
behaviour. Now, we will observe their implications.
Indifference Curves have a Negative Slope
In the words of Hicks, “so long as each commodity has a positive marginal utility, the indifference
curve must slope downward to the right”.
The negative slope of indifference curve implies-
1. that the two commodities can be substituted for each other
2. that if the quantity of one commodity decreases, quantity of the other commodity must
increase so that the consumer stays at the same level of satisfaction.
Example: Suppose you consume 10 apples and 20 bananas in a day, which gives you a
particular level of satisfaction. Now, if you consume 2 apples less, without increasing the number
of bananas, you will be at a lower level of satisfaction. You must consume 1 banana more, to
remain at the same satisfaction level. If you don’t do so, the bundle of goods (apples and bananas
together) gets smaller and you will not get as much satisfaction.
The consumer’s satisfaction cannot remain the same if indifference curves have a positive slope
( Y/ X>0) or if slope is equal to infinity ( Y/ X> ).
(Note: Y/ X gives the slope of the indifference curves)
These situations are shown in Figure 4.2 through inconsistent indifference curves.
Figure 4.2: Inconsistent Indifference Curves
K B
Commodity Y (per unit of time) Q y a b
Q y
J e c C
O Q x Q x
Commodity X
(per unit of time)
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