Can an indifference curve cross? Why?
With what we have learned so far about consumer preferences, we are able to depict the whole thing graphically.
The graphical representation will Indifference curve called. As the name suggests, they all lie on an indifference curve Bundle of goods, between which the consumer indifferent is, that is, all of which promise him the same satisfaction.
In order to get to the subscription, we present a bundle of goods to a consumer and let him decide how much of one good he is willing to sell in order to then receive more of the other good and to remain at the same level of satisfaction, i.e. indifferently between the bundles of goods be. We get several points in our diagram that we can connect.
Several courses of the curve are possible. The case shown is the most common. We will get to know a few more in the next section.
Properties of indifference curves
Which statements can we make about indifference curves?
Since we previously assumed that consumers prefer more goods to less, all bundles of goods, but also indifference curves to the right above our original indifference curve, are better.
In addition, they must not increase.
Since bundle B contains more of both goods than bundle A, it should actually be preferred to A, but here both are on the same indifference curve. But this contradicts the assumption of Unsaturation.
It is very important that indifference curves must not intersect.
Because here is the assumption of the Transitivity injured. The bundles of goods A and B lie on two different indifference curves. The intersection of both curves is the bundle C. A and B are indifferent to C: A ~ C and B ~ C. It follows that A ~ B also, which would mean, however, that both must lie on the same curve. Because of the contradiction that arises, indifference curves must not intersect.
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