6. a.

Indifference Curves
Indifference curves are the
graphical representation of the
preferences of a consumer. The
consumer finds all the points to be
equally desirable along the
indifference curve. This means
that in figure 6.a.1 the consumer is
equally satisfied being at point A
or B. The points A and be
correspond to differing amounts of
the goods P (pizza slices) and S
(salad). The consumer has the
same utility (U1) anywhere along
the indifference curve so he is
equally pleased to have any combination of pizza slices and salad as shown on the
indifference curve. At point A the consumer has 1 serving of salad and 5 slices of pizza.
At point B the consumer has 3 servings of salad and 2 slices of pizza. The consumer is
indifferent to either combination, which are referred to as market baskets. Other market
baskets, however, such as points C and D, do not offer the same utility as all the points
along the indifference curve U1. Because the basket C is above the indifference curve, we
know that it will provide more utility to the consumer than those points along U1. The
point D is below the indifference
curve and would offer less utility
than points along U1. Points C and
D can be paired with other baskets
that the consumer feels are equal to
them to show the indifference
curves that C and D fall on as seen
in figure 6.a.2. This indifference
curves each provide the same
utility to the consumer at any point
along the curve, but points on
differing curves do not provide
equal utility. The further the curve
is from the origin, the more utility
the consumer derives from the baskets (given that the goods are desirable).

Some examples of indifference curves

Perfect Substitutes
Figure 6.a.3 shows the indifference
curves for Coke and Pepsi. This
consumer considers them to be
perfect substitutes, which are
goods that a consumer sees as
being completely equal and
capable of taking the place of the
other and being equally well off.

Perfect Compliments
Figure 6.a.4 shows the indifference
curves for Coco and
Marshmallows. This consumer
considers the goods to be perfect
compliments, that is the consumer
cannot have one without the other.

Undesirables
Figure 6.a.5 shows the indifference
curves for Income and Head Aches
which are undesirable, or an
economic bad. In this case, the
market basket involves something
which is undesirable. The causes
the indifference curves to slope
upwards, instead of downward as
they do with desirable goods.

Irrelevances
Figure 6.a.6 shows the indifference
curves for Coffee and the amount
of Dust on the moon. The amount
of dust on the moon is considered
irrelevant. It is not desirable but it
is also not undesirable. It is
known as economic neuters.