Today's Question
An indifference curve shows all combinations of goods that give you the SAME level of satisfaction. You might be equally happy with 3 coffees + 2 pastries OR 2 coffees + 4 pastries. Why do indifference curves slope downward, and why can't two different indifference curves ever cross each other?
Model Answer
Downward slope: To stay equally happy when you give up coffee, you need MORE pastries to compensate. More of one good requires less of another to maintain satisfaction. Can't cross: If curves crossed, the crossing point would be on BOTH curves - meaning you're equally happy with two different satisfaction levels, which is a contradiction. It's like saying 'I'm both happy and happier at the same time.'