Indifference Curves

Question 1

The shape of the indifference curve is not chosen at random, but rather illustrates the assumptions which we make about consumer preferences.

The 2 factors are?

Answer 1

• non-satiation (the state of never being satisfied)
• diminishing marginal utility (utility decreases the more you have of it but it will never be 0)

Question 2

Utility as a function of one good (picture)

Answer 2

Question 3

Utility as a function of two goods (picture)

Answer 3