"An indifference curve is the locus of point- particular combinations of goods which yields the same satisfaction to the consumer so that the consumer is indifferent as to the particular combinations he/she consumes" or in simple words "an indifference curve is a curve which represents the various combinations between two goods which gives the same level of satisfaction to the consumer, is known as indifference curve"
There are three basic concepts of indifference curve which used in economics.
1. For Perfectly Substituted Goods
When the goods are perfectly substitute of each other then the indifference curve take place in form of linear shape and touch both the x-axis and y-axis.
2. For Limited Substitute goods
When the goods shows by the curve are substituted of each other upto a certain limit. In this case the curve takes place in form of convex shape to the origin.
1. For Perfectly Substituted Goods
When the goods are perfectly substitute of each other then the indifference curve take place in form of linear shape and touch both the x-axis and y-axis.
When the goods shows by the curve are substituted of each other upto a certain limit. In this case the curve takes place in form of convex shape to the origin.
3. For Zero Substituted Goods
When there are zero substitutability (complementary) goods to each other then the indifference curve.
For example there are two goods, good x and good y which represent an indifference curve through different combinations between them.
An Indifference Map
An Indifference Map is a graph which shows more than one indifference curve and rank them to consumer according to their satisfaction preferences.
Properties of Indifference Curve
When there are zero substitutability (complementary) goods to each other then the indifference curve.
An Indifference Map
An Indifference Map is a graph which shows more than one indifference curve and rank them to consumer according to their satisfaction preferences.
Properties of Indifference Curve
1. Indifference Curves are negatively sloped
The indifference curves should slope downward from left to right because as the consumer increases the consumption of good x, the consumer has to give up some units of good y in order maintain the same level of satisfaction.
2. Indifference Curves are convex to the origin
This is an important property of indifference curves. They are convex to the origin because as the consumer substitutes good x for good y, the marginal rate of substitution diminishes of good x for good y along an indifference curve.
3. Higher Indifference curve represents higher levels of satisfaction.
A higher indifference curve that lies away from the origin represents the higher level of satisfaction while the combinations on the lower indifference curve represents the lower level of satisfaction.
4. Indifference Curves cannot intersect each other.
Indifference Curves will not intersect each other if they did then a point comes on the graph among indifference curves which yields the same level of satisfaction which is totally impossible according to the definition and properties of indifference curve.
The indifference curves should slope downward from left to right because as the consumer increases the consumption of good x, the consumer has to give up some units of good y in order maintain the same level of satisfaction.
2. Indifference Curves are convex to the origin
This is an important property of indifference curves. They are convex to the origin because as the consumer substitutes good x for good y, the marginal rate of substitution diminishes of good x for good y along an indifference curve.
3. Higher Indifference curve represents higher levels of satisfaction.
A higher indifference curve that lies away from the origin represents the higher level of satisfaction while the combinations on the lower indifference curve represents the lower level of satisfaction.
4. Indifference Curves cannot intersect each other.
Indifference Curves will not intersect each other if they did then a point comes on the graph among indifference curves which yields the same level of satisfaction which is totally impossible according to the definition and properties of indifference curve.
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