Question

Determine which, if any, of Properties 4–1 through 4–4 are violated by the indifference curves shown in the following diagram.

Short answer

The curves shown in the diagram violated the property of Transitivity.

Step-by-step solution

Definition of indifference curve:

An indifference curve is a contour line whose utility remains constant at all points on the line.In economics, the indifference curve is a line drawn between different consumption bundles on a graph plotting the amount of good A consumed and the amount of good B consumed. In each of the consumer bundles, the individual is irrelevant.

Property of Transitivity:

A property is called a transitive property if x, y, and z are three quantities, x is associated with y by some rule, and y is associated with z by the same rule. It can be said that x is related to z. Same rule.

Basic properties

The four basic properties which work as an alternative forconsumers are:

1. Completeness - Indifference with all the bundles, the consumer should be capable of expressing some particular preference.
2. More is better - The consumer will see the product, as a good or a bad product, with different considerations.
3. Diminishing Rate of Marginal Substitution- As a consumer demandsGood $X$, the more he or she is willing to give upGood$Y$ to purchase another unit ofGood $\mathrm{X}$, as conclusionGoodrole="math" $\mathrm{Y}$ will decrease.
4. Transitivity - This property never gives the people the chance to choose between different goods. Preferences can be transitive if they are internally consistent.

Step 4: The properties or characteristics of the indifference curve are as follows:

1. Indifference curve has a negative slope:Theindifference curve slopes from left to right. That is, it has a negative slope. A negative gradient means that the two products alternate with each other. Therefore, if the quantity of one product decreases, consumers need to increase the quantity of the other product in order to maintain the same level of satisfaction.

2. Indifference Curve is Convex to the origin:The indifference curve of normal goods is convex with respect to the origin. This means that the two products are imperfect substitutes for each other, and as consumers move along the indifference curve, the marginal rate of substitution between the two products decreases. A decrease in the marginal rate of substitution means that the amount of X increases by the same amount and the amount of Y decreases by a smaller amount.

3. Higher indifference curve represents a higher level of satisfaction: A higher indifference curve represents a higher degree of satisfaction than a lower one. The reason is that the indifference curve above contains more of one or both products than below.

Looking at the diagram, the curves are not internally consistent, the curve is convex in the beginning but after a point it becomes concave. Therefore, the curves shown in the diagram violate the property of Transitivity.