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

#title., #Plot the demand schedule and draw the demand curve for the data g...

#Plot the demand schedule and draw the demand curve for the data given for Marijuana in the case above.question..

Direct control and moral suasion, Direct control and Moral Suasion Wit...

Direct control and Moral Suasion Without actually using the above weapons, the central bank can attempt simply to use "moral suasion" to persuade the commercial banks to restr

Ols estimator, The variance of the OLS estimator is VAR( ^B)=σ 2 /ns 2 x ...

The variance of the OLS estimator is VAR( ^B)=σ 2 /ns 2 x , where   s 2 x =£x 2 /x You're hired to estimate   and you're going to be paid according to the accuracy of your esti

Economic effects of taxation, ECONOMIC EFFECTS OF TAXATION a.  A det...

ECONOMIC EFFECTS OF TAXATION a.  A deterrent to work Heavy direct taxation, especially when closely linked to current earnings, can act as a serious check to production

Wage determination, WAGE DETERMINATION, POLICY AND THEORIES Wages and ...

WAGE DETERMINATION, POLICY AND THEORIES Wages and salaries are rewards to labour as a factor of production of goods and services.  In ordinary speech a distinction is frequent

Eceonomic therios, Ask questiHow does economic theory contribute to manager...

Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#

Elasticity of demand, a. Explain why the demand for a particular brand is m...

a. Explain why the demand for a particular brand is more elastic than the demand for all cigarettes. If Lucky Strike raised its price by 1% in 1918, was the price elast

Keynesian view on unemployment, KEYNESIAN VIEW ON UNEMPLOYMENT   Keynes...

KEYNESIAN VIEW ON UNEMPLOYMENT   Keynes  in his General Theory presented  a view  that  fluctuations in  aggregate demand (AD) influences the equilibrium level of output. Thus

Effect on a consumer''s equilibrium, Problem: (a) Explain with the help...

Problem: (a) Explain with the help of a diagram, the effect on a consumer's equilibrium, of an increase in the price of commodity X while the consumer's money income and price

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