Final answer:
An indifference curve represents combinations of goods that give the same utility, with a downward slope and convex shape denoting diminishing marginal utility and the marginal rate of substitution.
Step-by-step explanation:
A key characteristic of the indifference curve is that it represents different combinations of two goods that provide the same level of utility or satisfaction to the consumer. The downward slope of the indifference curve implies that if the quantity of one good decreases, the quantity of the other must increase to maintain the same level of utility. This tradeoff shows the consumer's willingness to substitute one good for another while remaining equally satisfied. Moreover, the shape of the curve is convex to the origin, reflecting diminishing marginal utility, meaning that as a consumer has more of one good, they will derive less additional satisfaction from its consumption.
The marginal rate of substitution (MRS) is the rate at which the consumer is willing to trade one good for another and is represented by the slope of the indifference curve. It measures the willingness to give up some quantity of one good to obtain an additional unit of another good, with the overall utility remaining unchanged. As we move down along the indifference curve, the slope becomes flatter, indicating that as the consumer has more of one good, they are less willing to give up significant amounts of it for additional units of the other good.