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

Consumer pays for peanut butter, Peanut butter monopolist Calvé supplies pe...

Peanut butter monopolist Calvé supplies peanut butter to Albert Heijn in an isolated village. The supermarket is a monopolist in the village. Demand for peanut butter is given by:

Remedies for unemployment, REMEDIES FOR UNEMPLOYMENT The measures appro...

REMEDIES FOR UNEMPLOYMENT The measures appropriate as remedies for unemployment will clearly depend on the type and cause of unemployment.  Broadly they can be divided into:

State the characteristics of managerial economics, CHARACTERISTICS OF MANAG...

CHARACTERISTICS OF MANAGERIAL ECONOMICS 1. Uses theory of firm: Managerial economics uses economic principles and conceptsthat are known as theory of Firm or 'Economics of the

What is marginal cost curve, Q. What is Marginal cost curve? MC curve i...

Q. What is Marginal cost curve? MC curve is also 'U' shaped as in Figure below. Marginal cost curve falls initially but then reaches a minimum point and lastly rises. Shape of

Investment demand theory , In the national income analysis, investment ref...

In the national income analysis, investment refers to the value of than part of the aggregate output for any given time period which takes the form of construction of new structure

expected profit, The Learned Book Company has a choice of publishing one o...

The Learned Book Company has a choice of publishing one of two books o the subject of Greek mythology.  It expects the sales period for each to be extremely short, and it estimates

Revenue, definition of total revenue,marginal revenue,average revenue

definition of total revenue,marginal revenue,average revenue

Limits on the process of bank deposit creation, Limits on the process of ba...

Limits on the process of bank deposit creation On the demand side , there may be a lack of demand for loans, or at least of borrowers who are sufficiently credit worthy .

Factors influencing supply curve - prices of related goods, Prices of other...

Prices of other related goods i)           Substitutes:   If X and Y are substitutes, then if the price X increases, the quantity demanded of X falls.  This will lead to inc

Derive the inter-temporal budget constraint, Problem: (a) (i) Assuming...

Problem: (a) (i) Assuming that a household uses a subjective discount rate of 10%, calculate the amount that she must spend on consumption per annum during her years of existe

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