Question

Which among the following is not an assumption of Indifference Curve?

• A. Completeness
• B. Transitivity
• C. More is better than less
• D. Unequal Satisfaction

Hint:

An indifference curve always represents equal satisfaction. So, any option suggesting unequal satisfaction is not an assumption of indifference curve analysis.

Answer 1

The Correct Option is D

Concept: An Indifference Curve represents different combinations of two goods that give the consumer the same level of satisfaction. It is based on certain assumptions of consumer behaviour.

Step 1: Understanding completeness.
Completeness means the consumer can compare any two bundles of goods. The consumer can say whether one bundle is preferred, the other is preferred, or both give equal satisfaction. Hence, completeness is an assumption of indifference curve analysis.

Step 2: Understanding transitivity.
Transitivity means if a consumer prefers bundle \(A\) to \(B\), and \(B\) to \(C\), then the consumer must prefer \(A\) to \(C\). \[ A>B,\quad B>C \Rightarrow A>C \] So, transitivity is also a valid assumption.

Step 3: Understanding more is better than less.
The assumption “more is better than less” means that a rational consumer generally prefers more quantity of goods to less quantity, provided the goods are normal and desirable.

Step 4: Identifying the incorrect assumption.
An indifference curve shows equal satisfaction at all points on the same curve. Therefore, “Unequal Satisfaction” cannot be an assumption of an indifference curve. \[ \text{Same IC} \Rightarrow \text{Same satisfaction} \] Hence, the correct answer is Unequal Satisfaction.