An indifference curve, since it represents level of satisfaction, is a subjective phenomenon. Each person has a unique set of indifference curves. Because satisfaction derived from a commodity differs from person to person. However, all indifference curves possess some common characteristics, which are known as properties of indifference curves. The following are those properties:
Indifference curves are infinite
Sample pictures of indifference curves may show you one or two indifference curves. However, the fact is that you can draw an infinite number of indifference curves between two indifference curves. A set of indifference curves is called an indifference map.
Indifference curve to the right represent higher level of satisfaction
The first property tells you that there are infinite indifference curves. All these indifference curves represent different levels of satisfaction. Higher indifference curve represents higher level of satisfaction. Let us look at the following figure 1.
When you move from point ‘a’ to ‘b’ (horizontal movement), you get more quantity of commodity x. The quantity of commodity x increases by ‘ab’ and the quantity of commodity y remains the same (OY0). When you move from point ‘a’ to ‘c’ (vertical movement), you get more quantity of commodity y. the quantity of commodity y increases by ‘ac’ and the quantity of commodity x remains the same (OX0). When you move from point ‘a’ to ‘d’ (diagonal movement), you get more quantity of both commodities (x and y). Hence, an indifference curve to the right always represents higher level of satisfaction. Because of this reason, the consumer always tries to move outward to maximize his level of satisfaction. This is known as “monotonicity” of preferences.
Indifference curves are not influenced by market or economic circumstances.
An indifference curve is purely a subjective phenomenon and it has nothing to do with the external economic forces.
Indifference curves do not intersect
Indifference curves cannot intersect each other. Suppose there are two indifference curves – ‘A’ and ‘B’. These two indifference curves represent two different levels of satisfaction. If these indifference curves intersect each other, the intersection will represent same level of satisfaction, which is impossible.
In figure 2, ‘A’ is the point where IC1 and IC2 intersect each other. Hence, at point A, both the curves yield same level of satisfaction. Now, can you tell which of these indifference curves give higher satisfaction? It is impossible to answer in this case for the reason that two indifference curves cannot yield same level of satisfaction.
Indifference curve has a negative slope
In order to remain on the same level of satisfaction (same indifference curve), the consumer must sacrifice one commodity for another. For this reason, an indifference curve always has a negative slope.
If a curve does not have a negative slope as shown in figure 3, it cannot be an indifference curve.
Indifference curves do not touch either axes
An indifference curve represents various combinations of two commodities. If an indifference curve touches horizontal axis or vertical axis, it implies that the customer prefers only one commodity because when it touches axes, one of the commodities becomes zero quantity. This violates the basic definition of an indifference curve. Hence, an indifference curve does not touch either horizontal axis or vertical axis.
Indifference curves need not be parallel.
Indifference curves are convex to the origin
Indifference curves are always convex to the origin. The convexity of the indifference curves indicates diminishing marginal rate of substitution (MRS).
Let us look at figure 5. When the consumer moves from A to B, he gives up ΔY1 of commodity Y to secure ΔX of commodity X. In this case, the MRSxy = ΔY1/ΔX. From the figure, it is clear that when he slides down from A to E, he gives up less and less of commodity Y for each additional unit of X. This forms a diminishing marginal rate of substitution.
Suppose that indifference curve is not convex to the origin. Other possibilities could be (a) concave to the origin and (b) straight line.
Figure 6(a) shows an indifference curve that is concave to the origin. In this case, ΔY2 is greater than ΔY1, ΔY3 is greater than ΔY2, and so on. Hence, you get increasing marginal rate of substitution of X for Y.
Figure 6(b) shows a straight line as an indifference curve. In this case, ΔY1 = ΔY2, ΔY2 = ΔY3, and so on. Hence, the marginal rate of substitution of X for Y remains constant. Both the cases violate the normal behavior of MRS that is diminishing.
Substitutes and complements
The shape of an indifference curve is helpful to understand whether commodities under consideration are substitutes or complements.
When two commodities are substitutes (interchangeable), their indifference curve will be a straight line. In this case, the marginal rate of substitution remains constant.
Recommended for You
Complementary goods mean that you cannot use one commodity without another (for instance, car and fuel). The indifference curve for complementary goods is L-shaped.
© 2013 Sundaram Ponnusamy
chayanika on October 10, 2019:
Tabssum on October 09, 2019:
very useful explanation
esther on October 04, 2019:
thanks for good explanation
zoya nisar on October 24, 2018:
Abah Priscilla Enewa on August 03, 2018:
this is geting really interesting
Seemab on May 12, 2018:
Please give me in detail of properties of indifference curve
BIKRAM SAHU on November 07, 2017:
ragina on July 06, 2017:
Chanti nayak on November 28, 2016:
Many thanks for good explanation
monoj on December 24, 2015:
Bhawani Singh on September 14, 2015:
lindani on August 24, 2015:
faisal rai on September 26, 2014:
very interesting and clear explanation of various economic issues.
Rohan Mundhey on August 24, 2014:
IT IS VE on February 24, 2014:
kaming tadar on December 14, 2013:
Hup page is suferb....... i like it most as this answers all my economic questions.
Firoz from India on July 05, 2013:
Great hub on Properties of the Indifference Curves. Voted up.