Final answer:
The incorrect statement about indifference curves is that individual indifference curves from the same investor are always in parallel. Indifference curves reflect a person's unique utility and are convex, not parallel. Higher and to the left curves are preferred, and steeper curves indicate higher risk aversion.
Step-by-step explanation:
When discussing the indifference curve, the same level of satisfaction, or utility. Indifference curves have certain characteristics, such as being downward-sloping, convex to the origin, and embodying the marginal rate of substitution. However, there are misconceptions about indifference curves that need to be addressed.
The statement that 'Individual indifference curves from the same investor are always in parallel' is incorrect. An individual's indifference curves can intersect based on their unique preferences and the shape of these curves is deeply personal, reflecting their specific utility functions. They do not run parallel because each succeeding curve represents a higher utility level, and they are not straight lines but rather convex to the origin, indicating that the consumer experiences a diminishing marginal rate of substitution.
Moreover, it is accurate that 'Indifference curves higher and to the left are preferred' since these typically represent higher utility levels. Consumers tend to prefer combinations of goods that provide more utility, hence their preference for indifference curves found in this region of the graph.
Regarding the risk aversion of investors portrayed by indifference curves, 'Investors with higher risk aversion coefficients will have steeper indifference curves' is a correct statement, as steeper indifference curves indicate a stronger preference for less risky portfolios over those with higher risk for a given level of expected return.