Indifference Curve

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Indifference Curve :

Indifference Curve By- Sunil Kumar Rahul Gunjal Radhe shyam shyam

Introduction :

Introduction The technique of indifference curve is develop by E gedworth in 1881 and its refinement is done by Pareto , an Italian economist in 1906. This technique, however attained perfection and systematic application in the demand analysis by Prof. J.R. Hicks and RGD A llen in 1934.

The concept of indifference Curve :

The concept of indifference Curve The indifference curve have been invented to represented to ordinal measurement of utility. Ordinal measurement implies the comparison and ranking without quantification of the satisfaction enjoyed by the consumer/ individual. In ordinal view, the utility is viewed as level of satisfaction not as the unit of satisfactions.

Definition:

Definition An indifference curve is define as the locus of point each representing a different combination of two substitute good which yield the same utility or level of satisfaction to the customer. The indifference curve is also known as Iso - utility curve and Equal utility curve .

Indifference curve Schedule :

Indifference curve Schedule An indifference schedule is the list of alternative combination of stock of two goods which yield the same level of satisfaction to the customer. Consequently, he will be not in the position to distinguish his preference between them and will be indifferent to these combination as all these will be equal preferred at a given rank of preference.

Indifference Curve Schedule :

Indifference Curve Schedule Combination Good P (x) Good Q (Y) A 1 18 B 2 13 C 3 9 D 4 6 E 5 4

Indifference Curve:

Indifference Curve Good P Good Q

Indifference Curve Map :

Indifference Curve Map Set of indifference curve is called as indifference Map.

Indifference Curve Map:

Indifference Curve Map

Indifference Curve: Assumption :

Indifference Curve: Assumption Rational Consumer. Ordinal Utility. Diminishing marginal rate of substitution. Two good Model. Consistency in selection.

Indifference Curve: Properties :

Indifference Curve: Properties Indifference curve have Negative slope . Indifference curve is Convex to the origin. Indifference curve do not Intersect and Tangent to each other. Upper indifference curve indicates Higher level of satisfaction then lower indifference curve.

Indifference Curve:

Indifference Curve Good P Good Q

Conclusion :

Conclusion The indifference curve indicates what the customer willing to buy. The Budget line shows what is the consumer is able to buy. When the indifference curve and budget line combined, we find the quantities of each good the consumer is willing and able to buy.

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