Indifference curve is the important contribution of
the ordinal approach of consumer behavior which was originally developed by
Hiss and subsequently supported by Heats and subsequently supported by Pareto.
Indifference curve is known as Iso-Utility Curve. It is
also known as equal Satisfaction Curve. The consumer is getting more or
less same level total satisfaction at each point of the curve. The hypothesis
of indifference curve analysis is that this approach is based on the hypothesis
that utility which is the satisfaction of the consumer can’t be measured terms
of money or price paid by the consumer in market, as utility is a matter of
order. A consumer can identify that he or she is interested to make more
payment for the consumption of product X than the consumption of product Y as
the consumer is getting more satisfaction on the consumption of product X in
comparison to the product Y.
Properties of
Indifference Curve:
1.
An indifference curve is always having a downward
trend due to its negative slope. It means that when the consumer is increasing
the consumption of product X, at the same time he has to reduce the consumption
of product Y. This is the rational behavior of consumer due to the existence of
limited budget line or income line.
Indifference curve can never get horizontal trend or
vertical trend. This is the fundamental distinction between indifference curve
and demand curve.
2.
An indifference curve is always having convex to its
origin. This is because the marginal rate of substitution between the
products X and Y is always diminidhing. It has been observed from the
principle of diminishing marginal utility if the indifference curve is
concave to its origin the consumer will get increasing marginal rate of
substitution between the products X and Y which is not possible in reality.
3.
Two indifference curve can intersect each other. This
is proved from the definition of indifference curve itself as we know that indifference
curve is an isoutility curve and therefore one indifference curve represents one
specific level of satisfaction which can never be identical with the other
level of satisfaction.