Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Identify false statement about indifferent curves (IC) from the following :

Options:

Two ICs can interest each other

Higher IC gives higher level of satisfaction

IC slopes downwards from left to right

All points on an IC give equal level of satisfaction to a consumer

Correct Answer:

Two ICs can interest each other

Explanation:

The correct answer is option (1) : Two ICs can interest each other

Here's why the other statements are true:

  • Higher IC gives higher level of satisfaction: This is true. An indifference curve further away from the origin represents a higher level of satisfaction for the consumer because it represents a combination of goods that provide a greater level of utility.
  • IC slopes downwards from left to right: This is true. The downward slope with a negative gradient reflects the principle of diminishing marginal utility. As the consumer consumes more units of one good, they'll be willing to give up less and less of the other good to maintain the same level of satisfaction.
  • All points on an IC give equal level of satisfaction to a consumer: This is true. By definition, any point on an indifference curve represents a combination of two goods that provides the consumer with the same level of satisfaction.