5.11 : Types of Indifference Curves

Indifference curves are usually convex to the origin due to the diminishing marginal rate of substitution. However, the shape of indifference curves varies depending on the type of goods.

Indifference Curves of Perfectly Substitute Products

Perfect substitutes are goods that a consumer can replace with one another at a constant rate. For example, tea and coffee may be viewed as perfectly substitute products by a consumer. In this case, the marginal rate of substitution (MRS) of one for the other is constant.This means that the consumer may trade off one cup of tea for one cup of coffee. The indifference curve for perfect substitutes is a straight line with a constant slope.

Indifference Curves of Perfectly Complementary Products

Perfectly complementary products are items that are used together in fixed proportions, such as left shoes and right shoes. The consumer's satisfaction depends on the combination of these goods, and increasing the quantity of only one good without increasing the quantity of the other does not increase consumer utility. For instance, a consumer is offered bundles of left and right shoes. Her satisfaction doesn't depend on the number of shoes but on the number of complete pairs, she can acquire. An extra shoe for the right foot doesn't increase her satisfaction if there's no corresponding left shoe. The shape of the indifference curve for perfectly complementary goods is right-angled.