Consider indifference curves for goods X and Y. Suppose we plot the quantity of good Y on the vertical axis and the quantity of good X on the horizontal axis

Question

a. Why are indifference curves downward sloping?
b. What is the economic interpretation of the slope of an indifference curve?
c. Following what we learned in the Appendix to this chapter, indifference curves would flatten out as someone consumes more of good X and less of good Y. What are we assuming when we draw indifference curves that become flatter?

Answer 1

a. Consumers are indifferent among all bundles on the same indifference curve. If indifference curves were upward sloping then a consumer would be indifferent between a bundle that has more of good X and more of good Y than a second bundle that includes less of both goods. This would make no sense, and so indifference curves must be downward sloping.
b. The slope of an indifference curve shows a consumer's willingness to trade good Y for an additional unit of good X.
c. If indifference curves become flatter then we are assuming that consumers are less willing to give up Y in return for an additional unit of X as they consume more X and less Y.