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Theory of consumer behaviour — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsTheory of consumer behaviour3 Marks
Question
Define an indifference curve. Why is it convex to the origin?
OR
Explain why an indifference curve is convex to the origin?
✓

Answer

Indifference curve shows different combinations of good X and good Y which give same level of satisfaction to the consumer. Indifference curve is convex to origin due to diminishing marginal rate of substitution. Marginal rate of substitution of X for Y refers to the number of units of good Y that the consumer is willing to forego for an additional unit of good X so as to maintain the same level of satisfaction.$\text{MRS}=\frac{\Delta\text{Y}}{\Delta\text{X}}$
MRS falls because when more and more units of X are obtained, its marginal utility declines and the consumer likes to sacrifice less of Y to obtain an additional unit of X. So, MRS declines.

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