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

Properties of indifference curves, Properties of Indifference Curves ...

Properties of Indifference Curves An indifference curve is usually convex to the origin. Indifference curves slope downwards from left to right. A set

Strategic reasons - reason for protection, Strategic Reasons For politi...

Strategic Reasons For political or strategic reasons, a country may not wish to be dependent upon imports and so may protect a home industry even if it is inefficient.  Many co

Calculate maximize total revenue, A city has two newspapers. Demand for eit...

A city has two newspapers. Demand for either paper depends on its own price and the price of its rival. Demand functions for paper A & B respectively, measured in tens of thousands

Way to deal with price rises, a) A country should always protect its dome...

a) A country should always protect its domestic industries. Discuss. b) To what extent can a country actually rely on the principle of Comparative Advantage before engaging

What is difference between monopoly and perfect competition, What is the di...

What is the difference between monopoly and perfect competition? Monopoly versus Perfect Competition: 1. Perfect competition is equal to monopoly competition, at the perfe

Borrowing facilities internationally, Borrowing Facilities If a countr...

Borrowing Facilities If a country's currency is not convertible, it can borrow from countries whose currencies are convertible and use the convertible currencies to make its i

Direct intervention of government in economy, Direct intervention   T...

Direct intervention   The government can also intervene directly in the economy to see that its wishes are carried out.  This can be achieved thorough: a.     Price and i

Managers need to know economics resources, Normal 0 false fal...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Determine marginal cost and hourly earnings, A firm hires two risk-neutral ...

A firm hires two risk-neutral workers to assemble bicycles and pays $20 for each assembly.Charlie's marginal cost of allocating effort (measured in dollars) to the production proce

Neo-classical view, The neo-classical view The neo-classical view is t...

The neo-classical view The neo-classical view is that market forces are the best directors of the economy.  Positive attempts by the government it is argued inevitably make th

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