The followings are the properties of indifference curves:
Essential Properties
1. Negative slope:
An indifference curve always slopes downward from left to right because when a consumer takes additional units of a commodity then some units of the other goods will have to be given up by the consumer to maintain the same level of satisfaction (by definition of IC) on an indifference curve.
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IC is an indifference curve. When consumer goes from combination A to B, then he gives up HA units of Y goods to take NB (X1X2) additional units of good X.
If an IC slopes upward to the right or is parallel to either x-axis or y-axis, then the different combinations on a single IC cannot yield equal satisfaction.
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2. Indifference curves are always convex to the origin:
This property of an indifference curve is based on diminishing marginal rate of substitution, which is the assumption of indifference curve analysis.
This property is made clear by fig. (c). When the consumer goes from A to B, B to C and C to D combination, each time he takes one additional unit of good X and gives EA, FB and GC units of good Y respectively.
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Therefore, MRS xy is diminishing when he goes from A to B, B to C and C to D combination because EA > FB > GC.
An indifference curve can’t be a straight line or convex to the origin because marginal rate of substitution will be same or increasing respectively.
3. A higher indifference curve represents higher level of satisfaction:
In an indifference map higher indifference curve represents those combinations which give more satisfaction than the combinations on a lower indifference curve. It is exhibited by fig. (d).
In both A and B combinations the quantity of goods-X is equal (OQ) but the quantity of goods-Y in combination A is ON which greater than quantity of y (OM) in combination B.
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Therefore, the satisfaction of A combination (which is an higher IC) is greater than satisfaction of combination B.
4. Two Indifference Curves can never cut each other:
The reason is that different indifference curves represent different levels of satisfaction. If two IC cut each other at a point then it means that at that point the level of satisfaction is the same on the two indifference curves, but it is impossible. It is made clear.
Taking IC1, by definition the satisfaction of:
P = B (Both on IC, curve)
Taking IC2, by definition the satisfaction of:
P = B (Both are on IC2 Curve)
satisfaction of A and B combinations must be equal (A = B) But satisfaction of A # B, because the quantity of both goods is equal in the two combination but quantity of goods Y in combination A is greater than in combination B. Therefore, two indifference curves can never intersect each other.
5. Indifference Curves are not necessarily parallel to each other:
We know that slope of an IC = MRSxy.
The two indifference curves are not necessarily parallel to each other because MRSxy and two indifference curves may or may not be equal.
6. An Indifference curve touches neither X-axis nor Y-axis:
The reason is that if an IC touches X-axis or Y-axis at any point, then the consumer takes only one goods. But it is against the assumption of indifference curves.
If money is taken on Y-axis, then IC curve can touch oy-axis.
7. Complex:
Indifference curves analysis becomes complex when a consumer takes combinations of more than two goods because in that case help of mathematics is required to analyze consumer’s behaviour and consumer’s demand.