2nd November 2019

economicsdiscussion
13

Why Isoquant curve is convex to the origin?

Isoquants are Convex to the Origin: Like indifference curves, isoquants are convex to the origin. In order to understand this fact, we have to understand the concept of diminishing marginal rate of technical substitution (MRTS), because convexity of an isoquant implies that the MRTS diminishes along the isoquant.

In this manner, what does it mean to have a convex indifference curve?

If you got the same marginal utility from consuming the next unit of some good or service, the indifference curve would be straight (though still downward sloping). However, because of diminishing marginal utility, the curve has to be convex to the origin.

What does it mean to have convex preferences?

In economics, convex preferences are an individual's ordering of various outcomes, typically with regard to the amounts of various goods consumed, with the property that, roughly speaking, "averages are better than the extremes".

Why PPC is concave to the point of origin?

The shape of a PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good. Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the PPF.
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