What determines the shape of indifference curve?

Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility. Description: Graphically, the indifference curve is drawn as a downward sloping convex to the origin. The graph shows a combination of two goods that the consumer consumes.

What is the shape of indifference curve if MRS is constant?

The shape of the indifference curve is a straight line if the MRS is constant.

What is indifference curve What is their significance explain their characteristics?

An indifference curve is a graphical representation of a combined products that gives similar kind of satisfaction to a consumer thereby making them indifferent. Every point on the indifference curve shows that an individual or a consumer is indifferent between the two products as it gives him the same kind of utility.

What do you mean by MRS in economics?

marginal rate of substitution
In economics, the marginal rate of substitution (MRS) is the amount of a good that a consumer is willing to consume compared to another good, as long as the new good is equally satisfying. MRS is used in indifference theory to analyze consumer behavior.

What will be the shape of the indifference curve when its slope increases?

Each person determines their own preferences and utility. Thus, while indifference curves have the same general shape—they slope down, and the slope is steeper on the left and flatter on the right—the specific shape of indifference curves can be different for every person.

What is significance of a budget line?

A budget line shows the combinations of two products that a consumer can afford to buy with a given income – using all of their available budget.

Why are most indifference curves convex?

Indifference curves are convex to the origin because as the consumer begins to increase his or her use of one good over another, the curve represents the marginal rate of substitution. The marginal rate of substitution goes down as the consumer gives up one good for another, so it is convex to the origin.

Why should MRS diminish for a stable consumer’s equilibrium?

Diminishing marginal utility clearly states that if the consumption increases, the utility derived from the additional units goes on decreasing. So, MRS should be diminishing as additional consumption of A results in a fall in marginal utility due to that the consumer will not be willing to increase its consumption.

Is Mrs the slope of the indifference curve?

Essentially, MRS is the slope of the indifference curve at any single point along the curve. The law of diminishing marginal rates of substitution states that MRS decreases as one moves down a standard convex-shaped curve, which is the indifference curve.