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

Illustrate the concept of present value, Illustrate the concept of present ...

Illustrate the concept of present value. The Concept of Present Value: While someone borrows money for a year, there the interest rate is the price, computed as a percent

Determine the specific place of demand, Determine the Specific Place of dem...

Determine the Specific Place of demand The demand should relate to a specific market as well. For instance, every year in the town of Dehradun, demand for school bags is 4,000

Applications of managerial theories and concepts in decision, Discuss the a...

Discuss the applications of Managerial economics concepts or theories in managerial decision making question..

Theories associated with different market structures, Theories associated w...

Theories associated with different market structures A firms profit maximising output decisions take into account the market structure under that they operate. There are 4 type

Shifts in demand curve, Shifts in demand curve Shifts in the demand cu...

Shifts in demand curve Shifts in the demand curve are brought about by the changes in factors like taste, prices of other related commodities, income etc other than the price

Price output determination , Discuss the price output determination using p...

Discuss the price output determination using profit maximization under perfect  competition in the short run.

Explain about cardinal utility, Q. Explain about Cardinal utility? A me...

Q. Explain about Cardinal utility? A measure of utility or satisfaction derived from consumption of services and goods which can be measured using an absolute scale. Cardinal u

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

Waste in imperfect competition, WASTE IN IMPERFECT COMPETITION Monopol...

WASTE IN IMPERFECT COMPETITION Monopolistic competition involves some degree of waste in two aspects. When new firms enter the industry and the demand for the individual fi

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