INDIFFERENCE CURVE ANALYSIS

Definition : An indifference curve is the locus of points representing all the different combinations of two goods which yield equal level of utility to the consumer. Indifference Schedule : Indifference schedule is a list of various combinations of commodities which are equally satisfactory to the consumer concerned.
Combinations A B C D E Apples 15 11 8 6 5 Mangoes 1 2 3 4 5

Indifference curve IC shows all possible combinations of apples and mangoes between which a person is indifferent. Point A shows consumption bundle consisting of 15 apples and one mango. Moving from point A to Point B, we are willing to give up 4 apples to get a second mango (total utility is the same at points A and B).
16 A 14 12 B C D E IC

Apples

10 8 6 4 2 0 0 1 2 3 Mangoes 4 5 6

Properties of indifference curves :

Indifference curves are negatively sloped Given a combination of commodity X and commodity Y, with every increase in X, the amount in Y should fall in order that the level of satisfaction from every combination should remain the same.

Indifference curves are convex to the origin Convexity illustrates the law of diminishing marginal rate of substitution.

Indifference curves can never intersect each other Indifference curves can never intersect each other because each indifference curve represents a specific level of satisfaction. If two indifference curves intersect each other, then at the point of intersection, the consumer is experiencing two different levels of utility.