What is indifference curve analysis? State its assumptions.
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Definition:
An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility thereby making the consumer indifferent.
Assumptions:
(1) The consumer acts rationally so as to maximise satisfaction. (2) There are two goods X and Y. (3) The consumer possesses complete information about the prices of the goods in the market. ... (4) The consumer's tastes, habits and income remain the same throughout the analysis.
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