Indifference curves, Managerial Economics

Assignment Help:

Indifference curves

In order to explain indifference curves, we will again make the simplifying assumption that the consumer buys two goods, x and y.

The table below gives a number of combinations of x and y which the consumer considers to give the same satisfaction as for example, combination c of bx and 4y is thought to give the same satisfaction as D where 7x and 2y are consumed.  The consumer is thus said to be indifferent as to which combination they have hence the name given to this type of analysis.

Table :  An indifference schedule

Combination

Units of x

Units of y

       A

       B

       C

       D

       1

       4

       6

       7

      12

       7

       4

       2

Figure 2.3 gives a graphical representation of the figures in Table

 

751_indifference curve.png

Such a graph is called an indifference curve:

An indifference curve shows the lines of combinations of the amounts of two goods say x and y such that the individual is indifferent between all combinations on that curve.

At each point on the indifference curve the consumer believes that the same amount of utility is received.


Related Discussions:- Indifference curves

Calculate the firms short-run total cost curve, A firm producing hockey sti...

A firm producing hockey sticks has a production function given by X = 2 KL In the short-run, the firm's amount of capital equipment is fixed at K = 1000. The rental rate fo

Managerial economics problem, Suppose there are two types of T-shirts: bran...

Suppose there are two types of T-shirts: branded ones and unbranded ones and people allocate their spending in a way that they buy both types. Suppose the price of branded T-shirts

Elasticity and consumption expenditure, The relationship between, total exp...

The relationship between, total expenditure and price elasticity of demand has summed up in the below table: Table: Elasticity and Consumption Expenditure Elas

Elasticity of demand, When given two demand functions to calculate elastici...

When given two demand functions to calculate elasticity of demand do you use point elasticity or arc elasticity of demand formula

The results of the hypothesis test, Use the data set cd costs2010 to estima...

Use the data set cd costs2010 to estimate the marginal cost of one more CD. (Regress costs on the number of CDS.) Test the hypothesis that the marginal cost equals 75 cents. How wo

Law of demand, explain the law of demand. briefly discuss the exception to ...

explain the law of demand. briefly discuss the exception to the law of demand

Measuring point elasticity on a non-linear demand curve, Measuring Point El...

Measuring Point Elasticity on a Non-linear Demand Curve Let's now explain the method of measuring point elasticity on a non-linear demand curve. Assume we want to measure the

Types of unemployment, TYPES OF UNEMPLOYMENT   A  person  can  be  eith...

TYPES OF UNEMPLOYMENT   A  person  can  be  either  in the labour force  or  not  in  the  labour  force  of  an economy. The person not  included  in  the  labour force includ

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd