Final answer:
An indifference curve is drawn on a budget constraint diagram that shows the tradeoffs between two goods. Higher indifference curves represent higher levels of utility. Indifference curves slope downward because of diminishing marginal utility.
Step-by-step explanation:
An indifference curve is drawn on a budget constraint diagram that shows the tradeoffs between two goods. All points along a single indifference curve provide the same level of utility. Higher indifference curves represent higher levels of utility. Indifference curves slope downward because, if utility is to remain the same at all points along the curve, a reduction in the quantity of the good on the vertical axis must be counterbalanced by an increase in the quantity of the good on the horizontal axis (or vice versa). Indifference curves are steeper on the far left and flatter on the far right, because of diminishing marginal utility.