Producer Behaviour - Consumer preferences - Indifference curves
3 important questions on Producer Behaviour - Consumer preferences - Indifference curves
An indifference curve is a:
Set of bundles all of which are equally attractive as the original bundle A, and hence also equally attractive as one another.
In general, bundles that lie above an indifference curve are all preferred to the bundles that lie on it. That being so, we can represent a sample of the set of a consumer's indifference curves, used as a graphical summary of her preference ordering. This is called an:
Indifference map
Three important properties of indifference curves and indifference maps:
1. Indifference curves are ubiquitous. Any bundle has an indifference curve passing through it.
2. Indifference curves are downward sloping (comes from the 'more is better' assumption.
3. Indifference curves (from the same indifference map) cannot cross.
2. Indifference curves are downward sloping (comes from the 'more is better' assumption.
3. Indifference curves (from the same indifference map) cannot cross.
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