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  • Question
  • Consider the following statements about indifference curves: 1. Indifference curves are convex to the origin. 2. Higher indifference curve represents higher level of satisfaction. 3. Two indifference curves cut each other.Which of the statements given above is/are correct?


  • Options
  • A. 1 only
  • B. 1 and 2
  • C. 2 and 3
  • D. 3 only

  • Correct Answer
  • 1 and 2 

    Explanation

    The indifference curves cannot intersect each other.

    Higher indifference curve represents a higher level of satisfaction because higher IC means a bundle consisting more of both the goods or same quantity of one good n more quantity of the other good .Hence statement 2 is correct and 3 is incorrect.

    Indifference curves is convex to the point of origin because of diminishing Marginal Rate of Substitution.

  • Tags: Bank Exams

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