Write about ISO - Utility Curve in detail.
Answers
Indifference curve
An indifference curve is a locus of all combinations of two goods which yield the same level of satisfaction (utility) to the consumers.
Since any combination of the two goods on an indifference curve gives equal level of satisfaction, the consumer is indifferent to any combination he consumes. Thus, an indifference curve is also known as ‘equal satisfaction curve’ or ‘iso-utility curve’.
On a graph, an indifference curve is a link between the combinations of quantities which the consumer regards to yield equal utility. Simply, an indifference curve is a graphical representation of indifference schedule.
The table given below is an example of indifference schedule and the graph that follows is the illustration of that schedule.
Table: Indifference schedule
Combination Mangoes Oranges
A 1 14
B 2 9
C 3 6
D 4 4
E 5 2.5