Question

What role does indifference curve play in consumer analysis

Answer 1

Answer:

Consumer equilibrium refers to a situation, in which a consumer derives maximum satisfaction, with no intention to change it and subject to given prices and his given income. The point of maximum satisfaction is achieved by studying indifference map and budget line together.

Answer 2

Answer : Indifference Curve

Explanation :

Indifference Curve :

An indifference curve is a graphical representation of a combined product that gives similar kind of satisfaction to a consumer thereby making them indifferent.Every point on the indifference curve shows that an individual or a consumer is indifferent between the two products as it gives him the same kind of utility.

KEY TAKEAWAYS :

• An indifference curve shows a combination of two goods in various quantities that provides equal satisfaction (utility) to an individual.

• It is used in economics to describe the point where individuals have no particular preference for either one good or another based on their relative quantities.

• Along the curve, a consumer thus has an equal preference for the various combinations of goods shown.

• Typically, indifference curves are shown convex to the origin, and no two indifference curves ever intersect.

Properties of Indifference Curve :

• The Indifference Curve slopes downward
• The Indifference Curve is convex to the origin
• A higher Indifference Curve shows a higher level of satisfaction
• Indifference Curves do not cross or intersect
• The Indifference Curve does not touch the X or Y axis

Characteristics of Indifference Curves :

• Indifference curves slope downward to the right

• Every indifference curve to the right represents a higher level of satisfaction

• Indifference curves cannot intersect each other

• Indifference curve will not touch the axis

• Indifference curves are convex to the origin

Indifference Curve in Consumer Analysis :

Indifference curves operate under many assumptions; for example, each indifference curve is typically convex to the origin, and no two indifference curves ever intersect. Consumers are always assumed to be more satisfied when achieving bundles of goods on indifference curves that are farther from the origin.

As income increases, an individual will typically shift their consumption level because they can afford more commodities, with the result that they will end up on an indifference curve that is farther from the origin—hence better off.

Many core principles of microeconomics appear in indifference curve analysis, including individual choice, marginal utility theory, income, substitution effects, and the subjective theory of value. Indifference curve analysis emphasizes marginal rates of substitution (MRS) and opportunity costs. Indifference curve analysis typically assumes that all other variables are constant or stable.

The indifference curve analysis works on a simple graph having two-dimensional. Each individual axis indicates a single type of economic goods. If the graph is on the curve or line, then it means that the consumer has no preference for any goods, because all goods have the same level of satisfaction or utility to the consumer.

To know more about the concept please go through the links :

https://brainly.in/question/12953554

https://brainly.in/question/4009386

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