Indifference Curve | Explain why two indifference curves cannot intersect.

Explain why two indifference curves cannot intersect.

ANSWER

The figure below shows two indifference curves intersecting at point A. We know from the definition of an indifference curve that the consumer has the same level of utility for every bundle of goods that lies on the given curve. In this case, the consumer is indifferent between bundles A and B because they both lie on indifference curve U₁. Similarly, the consumer is indifferent between bundles A and C because they both lie on indifference curve U₂. By the transitivity of preferences this consumer should also be indifferent between C and B. However, we see from the graph that C lies above B, so C must be preferred to B because C contains more of Good Y and the same amount of Good X as does B, and more is preferred to less. But this violates transitivity, so indifference curves must not intersect.