Indifference
Curve AnalysisIn Microeconomics, the Indifference Curve Analysis is an important analytical tool in the study of consumer behaviourAn indifference curve is a locus of combinations of goods which derive
the same level of satisfaction, so that the consumer is indifferent to
any of the combination he consumes.If a consumer equally prefers two
product bundles, then the consumer is indifferent between the two
bundles. The consumer gets the same level of satisfaction (utility) from
either bundle. Graphically speaking, this is known as the indifference
curve. An indifference curve shows combinations of goods between which a
person is indifferent.
The Uses or Application of Indifference Curve Analysis!
The indifference curve technique has come as a handy tool in economic analysis. It has freed the theory of consumption from the unrealistic assumptions of the Marshallian utility analysis. In particular, mention may be made of consumer’s equilibrium, derivation of the demand curve
Indifference curves are infinite
Sample pictures of indifference curves may show you one or two indifference curves. However, the fact is that you can draw an infinite number of indifference curves between two indifference curves. A set of indifference curves is called an indifference map
Indifference curve to the right represent higher level of satisfaction
The first property tells you that there are infinite indifference curves. All these indifference curves represent different levels of satisfaction. Higher indifference curve represents higher level of satisfaction.
Indifference curves are not influenced by market or economic circumstances.
An indifference curve is purely a subjective phenomenon and it has nothing to do with the external economic forces.
Indifference curves do not intersect
Indifference curves cannot intersect each other. Suppose there are two indifference curves – ‘A’ and ‘B’. These two indifference curves represent two different levels of satisfaction. If these indifference curves intersect each other, the intersection will represent same level of satisfaction, which is impossible.
The Uses or Application of Indifference Curve Analysis!
The indifference curve technique has come as a handy tool in economic analysis. It has freed the theory of consumption from the unrealistic assumptions of the Marshallian utility analysis. In particular, mention may be made of consumer’s equilibrium, derivation of the demand curve
Indifference curves are infinite
Sample pictures of indifference curves may show you one or two indifference curves. However, the fact is that you can draw an infinite number of indifference curves between two indifference curves. A set of indifference curves is called an indifference map
Indifference curve to the right represent higher level of satisfaction
The first property tells you that there are infinite indifference curves. All these indifference curves represent different levels of satisfaction. Higher indifference curve represents higher level of satisfaction.
Indifference curves are not influenced by market or economic circumstances.
An indifference curve is purely a subjective phenomenon and it has nothing to do with the external economic forces.
Indifference curves do not intersect
Indifference curves cannot intersect each other. Suppose there are two indifference curves – ‘A’ and ‘B’. These two indifference curves represent two different levels of satisfaction. If these indifference curves intersect each other, the intersection will represent same level of satisfaction, which is impossible.
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