Question

Explain why we assume indifference curves for the choice of consumption and leisure are convex and not concave (you can use a graph if it helps to explain your answer).

Answer 1

Indifference curve shows various combination of two goods on curve that gives the same level of satisfaction at which consumer is indifferent between various combination.. and the rate at which one goods is substituted for another is called marginal rate of substituion . now if we consider consumption and leisure. then it would be shown by indifference curve and various combination of consumption an leisure are determined. but for a consumer, consumption and leisure both are necesary but he can manage both by sarificing each other. to gain same level of satisfaction and it would be convex in nature as one goods has to be increased by sacrificing another goods not the concave in which resources are substitued for production of goods of two goods. concavity of indifference curve does represent that only one goods at a time might be consumed by consumer.  the consumer will not be in equilibrium at the point of tangency between budget line and indifference curve,

concavity of indifference curves for a consumer implies that the consumer spends his entire income on a commodity and therefore buys only one commodity which is unrealist in practical scenario where at a time large of goods and services are consumed. thats why existence of concave indifference curves opposed.