August 29, 2015

Indifference Curve

What is Indifference Curve and what are its characteristics?
Firstly, An indifference curve is a graph showing combination of two goods which give the consumer equal satisfaction and Purpose. At any point the consumer has no preference to one good, that is he is indifferent at all points. At the end the consumer gets the same net utility even he chooses different combinations. Indifference curves tend to be negatively sloped because of diminishing returns. If you gain more good X, the utility of X starts to show diminishing returns

Characteristics of Indifference Curve:
Any point on each indifference curve gives consumer same net utility.
The curve is a analytical tool in studying of consumer behavior, it is related to consumer demand.
One conclusion from Indifference Curve is if  you get more good X, the extra good X is worth less.


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