INDIFFERENCE CURVE

 Meaning of indifference curve 

 Indifference curve is a locus of all points which shows different combinations of two commodities which yield equal satisfaction to the consumer.

Indifference schedule

 Indifference schedule:-  it is table which show different combinations of two goods which give equal satisfaction.

Indifference graphical:-

Indifference curves is the graphical presentation of indifference schedule which shows different combinations of two goods which give equal satisfaction.

Indifference map :-Indifference map is a group of indifference curves every succeeding curve shows a higher level of satisfaction.

Properties of indifference curves

1) IC slopes downward(Negative slopes)  :- means that consumer is have equal level of satisfaction at all points at same IC

2) Two ICs never intersect  each other- Point C and A  2 have same level of satisfaction and Point C and B on IC 1 have same level of satisfaction. This means that satisfaction from point A and B is same. But we can see from the diagram that in point A we have more units of good y than point B which means both give different level of satisfaction. Thus, 2 ICs never intersect.

3) Higher level of indifference curve represents higher level of satisfaction: An IC that lies farther from the origin provides higher level of satisfaction. It is because the higher IC consists the more amount of both or at least one of the goods.

4) Indifference curve are convex to origin :-Can never be straight line Can never be concave to the origin. because of the rate of substitution.

5) Indifference curve does not parallel to each other:-  it is not parallel to each other it all depends on the marginal rate of substitute of two curves shows in the indifference map.

6) IC never touch X axis and Y axis :- a consumer buys combinations of different quantities of two goods hence indifference curves touches neither x axis or y axis it means that consumer wants only one community and second community demands zero

Law of Diminishing Marginal Rate of Substitution

This law states that as a consumer gets more and more units of a commodity, he will be willing to give up less and less units of another commodity, so that the level of satisfaction of the consumer remains the same

Slope of isoquant

Marginal Rate of technical substitution:- change in capital/change in labour= Diminishing marginal rate of technical substitution