What is indifference curve explain with the help of diagram and also explain its properties?

Definition: An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Description: Graphically, the indifference curve is drawn as a downward sloping convex to the origin. The graph shows a combination of two goods that the consumer consumes.

Why is it important in 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 and the concept of consumer’s surplus.

Why does the consumer get the maximum satisfaction when the indifference curve is tangent to the budget line?

Budget line should be tangent to the indifference curve A budget line can be drawn on the basis of expenditure plan. Thus, the consumer will be in equilibrium (achieve maximum satisfaction at any given level of income) where the budget line is tangent to the indifference curve, i.e. at point E on IC2.

What do you understand by indifference curve?

An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent. Along the curve, the consumer has an equal preference for the combinations of goods shown—i.e. is indifferent about any combination of goods on the curve.

Why does the indifference curve approach is better than marginal utility approach?

The indifference curve technique is definitely superior to the utility analysis because it discusses the income effect when the consumer’s income changes; the price effect when the price of a particular good changes and its dual effect in the form of the income and substitution effects.

What do you understand by indifference curve describe its characteristics?

An indifference curve is a graphical representation of a combined products that gives similar kind of satisfaction to a consumer thereby making them indifferent. Every point on the indifference curve shows that an individual or a consumer is indifferent between the two products as it gives him the same kind of utility.

What is indifference curve in business economics?

In economics, an indifference curve is a curve that shows the combination of two goods that give a consumer equivalent satisfaction and utility. When two goods or products with different qualities give a consumer the same level of satisfaction and utility, an indifference curve is realized.

What is indifference curve explain it with an example?

A popular alternative to the marginal utility analysis of demand is the Indifference Curve Analysis. This is based on consumer preference and believes that we cannot quantitatively measure human satisfaction in monetary terms.

What is indifference curve explain the characteristics of indifference curve?

The four properties of indifference curves are: (1) indifference curves can never cross, (2) the farther out an indifference curve lies, the higher the utility it indicates, (3) indifference curves always slope downwards, and (4) indifference curves are convex.

What are indifference curves explain the consumer equilibrium?

Consumer equilibrium refers to a situation, in which a consumer derives maximum satisfaction, with no intention to change it and subject to given prices and his given income. So, a consumer always tries to remain at the highest possible indifference curve, subject to his budget constraint.