Properties of Indifference Curve

Indifference Curve analysis has rejected the concept of cardinal utility approach (Marginal Utility Analysis) and adopted the concept of ordinal utility.
This implies that consumer compare the utility (which goods or which combination of goods give him the same, more or less utility) derived from different goods. In this utility is not measured in quantitative terms but on the scale of preference.
Below shown is the Indifference Curve.

Properties of Indifference Curve :

indifference curve

1) Has a Negative Slope :

An indifference curve slopes downwards from left to right. This is due to the assumption of Marginal Rate of Substitution.

This means that as the consumer consumes more of one commodity say X, he must consume less quantity of the other say Y, then only  he will have the same level of satisfaction from different combinations of the two commodities.

As shown in the below graph, going to combination B from A, to get 1 additional unit of food,he has to give up 3 units of clothing. If unit of food is increased, without changing the unit of clothing than the consumer will prefer new combination to the previous one as the new combination gives him more utility.

This is necessary that the indifference curve should be negatively sloped,then only satisfaction remains the same in both the combination.

2) Is convex to the Origin :

This means that the curve bows inwards to the origin or the slope of the curve decreases as we move down the curve.
This is due to the assumption of diminishing Marginal Rate of Substitution.

This means that as the consumer substitutes more and more of one commodity say X for another commodity say Y, he will be prepared to give up lesser units of the Y for each additional units of X.

As shown in the below graph,When the consumer is moving from combination A to B, he is giving 3 Units of clothing to get 1 unit of food.
From combination B to C, giving 2 units of clothing to get 1 unit of food. From combination C to D, giving 1 units of clothing to get 1 unit of food.
We see that for each additional unit of food, the rate of giving up clothing is falling (from 3…2…1).

We normally observe that the consumer’s willingness to sacrifice a commodity is lower when the stock of the commodity with him is less.
He gives more importance to a unit of the commodity the amount of which is decreasing.
So due to diminishing Marginal Rate of Substitution, indifference curve is convex to the origin.

3) Higher indifference curves yield higher Satisfaction :

An indifference curve which lies above and to the right of another indifference curve gives a higher level of satisfaction than the lower one since it will be giving  more amount of one commodity or the other or more amount of both the commodities.

As shown in the below graph,  all the combination of  points on IC₁ will give him more amount of the commodities, thereby giving more satisfaction from original IC curve.

So higher indifference curves yield higher satisfaction.

4) Two Higher indifference curves never intersect each other :

This is due to the fact that Higher indifference curves represents different level of satisfaction  so they do not intersect on cut each other.If they intersect it means that a combination of goods corresponding to the point of intersection would give two different levels of satisfaction, which is wrong. 

As shown in the graph below,IC₁ and IC₂ are the two indifference curve showing different level of satisfaction.All the combination of points chosen by a consumer in IC₁ provides higher satisfaction as compared to IC₂ (also discussed in point 3).

Indifference Curve

But if the two curves intersect at point A, it means that be the consumer at IC₁ or IC₂, combination ‘A’ provides same level of satisfaction and that is not possible.

Thus two indifference curve never intersect.