How is the indifference curve look like for bad goods?

In the case of bads, indifference curves are of different shape. Suppose a bad (for example, pollution) is represented on the X-axis and a commodity which is “good” is represented on the y-axis, then the indifference curve will be sloping upward (that is, will have a positive slope) as displayed in Figure 8.9.

When consumer is neutral to good Y indifference curve will be?

If a commodity X is a neuter and Y a normal commodity, the indifference curves will be horizontal straight lines as shown in the figure 15a indicating that a higher satisfaction level can only be achieved from increasing the consumption of the normal good.

When consumption bundles contain a bad and a good the indifference curves are?

Case 1: The indifference curve represents one good and one bad When one of the two goods represented in the indifference curve is a bad it means that the consumer prefers less of that good (the bad) rather than more of the good. In that case, a set of indifference curves is upward sloping.

Can indifference curves be negative?

Indifference curves are negatively sloped because for a constant level of utility, if the consumer wants to increase the consumption of one good, she has to reduce the consumption of the other good.

What is indifference curve with examples?

An indifference curve shows all combinations of goods that provide an equal level of utility or satisfaction. For example, Figure 1 presents three indifference curves that represent Lilly’s preferences for the tradeoffs that she faces in her two main relaxation activities: eating doughnuts and reading paperback books.

What is a neutral good in economics?

In economics, neutral goods refers either to goods whose demand is independent of income, or those that have no change on the consumer’s utility when consumed. The second definition says that a good is neutral if the consumer is ambivalent towards its consumption.

What does a negative slope of an indifference curve mean?

The negative slope of the indifference curve implies that the marginal rate of substitution is always positive; Complete, such that all points on an indifference curve are ranked equally preferred and ranked either more or less preferred than every other point not on the curve.

What are bads in economics?

An economic bad is the opposite of an economic good. A ‘bad’ is anything with a negative value to the consumer, or a negative price in the marketplace. With normal goods, a two-party transaction results in the exchange of money for some object, as when money is exchanged for a car.

Why is indifference curve negatively sloped?

The indifference curve is drawn as a downward slope from left to right; in other words, it is negatively sloped. This is because as the consumer increases the consumption of a particular commodity (X), he or she must sacrifice units of the other commodity (Y) to maintain the same level of satisfaction.

What are the types of indifference curve?

The four properties of indifference curves are: (1) indifference curves can never cross, (2) the farther out an indifference curve lies, the higher the utility it indicates, (3) indifference curves always slope downwards, and (4) indifference curves are convex.