Explain how lower IC provide lower level of satisfaction?
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Hlo ronaldo hope you remember me
A popular alternative to the marginal utility analysis of demand is the Indifference Curve (IC)
Analysis. This is based on consumer preference and believes that we cannot quantitatively measure human satisfaction in monetary terms.
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What is an Indifference Curve?
An indifference curve is a curve that represents all the combinations of goods that give the same satisfaction to the consumer. Since all the combinations give the same amount of satisfaction, the consumer prefers them equally. Hence the name indifference curve.
Here is an example to understand the indifference curve better. Peter has 1 unit of food and 12 units of clothing. Now, we ask Peter how many units of clothing is he willing to give up in exchange for an additional unit of food so that his level of satisfaction remains unchanged.
Peter agrees to give up 6 units of clothing for an additional unit of food. Hence, we have two combinations of food and clothing giving equal satisfaction to Peter as follows:
1 unit of food and 12 units of clothing
2 units of food and 6 units of clothing
An indifference curve is a curve that represents all the combinations of goods that give the same satisfaction to the consumer. Since all the combinations give the same amount of satisfaction, the consumer prefers them equally. Hence the name indifference curve.
Here is an example to understand the indifference curve better. Peter has 1 unit of food and 12 units of clothing. Now, we ask Peter how many units of clothing is he willing to give up in exchange for an additional unit of food so that his level of satisfaction remains unchanged.
Peter agrees to give up 6 units of clothing for an additional unit of food. Hence, we have two combinations of food and clothing giving equal satisfaction to Peter as follows:
1 unit of food and 12 units of clothing
2 units of food and 6 units of clothing
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