Class 11th Important Questions with Answers (Indifference Curve)

1. What is an indifference curve?

   An indifference curve is a graphical representation that shows different combinations of two goods that provide a consumer with the same level of satisfaction or utility.

2. What does the slope of an indifference curve indicate?

   The slope of an indifference curve represents the rate at which a consumer is willing to substitute one good for another while maintaining constant satisfaction.

3. How do indifference curves reflect consumer preferences?

   Indifference curves depict different combinations of goods that yield equal satisfaction to the consumer, reflecting their preferences for various bundles.

4. What does it mean if two indifference curves do not intersect?

   If two indifference curves do not intersect, it implies that the consumer prefers the bundles on the higher curve as they provide greater utility.

5. Explain the concept of diminishing marginal rate of substitution (MRS).

   Diminishing marginal rate of substitution means that as a consumer gives up more of one good to obtain an additional unit of another, the amount they are willing to give up decreases.

6. How can you tell a consumer's preference from the shape of their indifference curve?

   The shape of an indifference curve indicates the consumer's preference: a steeper curve implies a higher marginal rate of substitution and a stronger preference for the good on the horizontal axis.

7. What happens to an indifference curve if a consumer's utility increases?

   If a consumer's utility increases, their indifference curves shift outward, representing higher levels of satisfaction across all bundles.

8. Can indifference curves cross?

   No, indifference curves cannot cross, as it would violate the transitive property of consumer preferences.

9. Explain the concept of perfect substitutes and give an example.

   Perfect substitutes are goods that a consumer is willing to trade for each other in a constant ratio. An example is generic brands of certain products like salt or sugar.

10. Describe the concept of convexity of indifference curves.

    Convexity of indifference curves reflects the diminishing marginal rate of substitution, showing that consumers are less willing to substitute goods as they move along an indifference curve.

11. How do budget constraints interact with indifference curves to determine consumer equilibrium?

    Budget constraints limit the combinations of goods a consumer can afford. The consumer reaches equilibrium where the highest indifference curve is tangent to the budget constraint.

12. Can an indifference curve be upward-sloping?

    No, indifference curves are typically downward-sloping due to the law of diminishing marginal rate of substitution.