An indifference curve represents the different combinations of two items that will provide the customer with an equal degree of satisfaction. As a result, an indifference curve may be described as a locus of all the points expressing different. Combinations of two items that provide the same satisfaction but leave the customer indifferent. Each point on an indifference curve provides the same total utility as every other point on the same indifference curve. If these points are connected to create a curve, the curve is known as an indifference curve.
What is Indifference Curve
An indifference curve may be described as a list of different combinations of two items that will be equally acceptable to the consumer.
A table can be used to demonstrate the idea of the indifference curve. It’s also known as an indifference schedule. In schedule, there exist live combinations of excellent X and Y. Each combination provides equal satisfaction to the buyer (in units). As a result, the consumer prefers all of the combinations without distinction. Because the customer is indifferent in this schedule, it is known as the indifference schedule.
On the basis of this indifference schedule, an indifference curve may be constructed. In the diagram, IC represents the indifference curve, which depicts the different combinations of those two items that provide the customer with equal satisfaction.
The curve is also known as the iso-utility curve or a curve of equal utility.
|Combinations||No. of good X||No. of good Y|
The indifference curves (IC) depicted in the illustration are based on the assumption that the customer has just one indifference curve in which the different combinations of two items give a certain degree of satisfaction. A consumer can have an unlimited number of such indifference curves for two separate items with varying levels of satisfaction. In that scenario, a series of in-difference curves can be drawn one on top of the other. As seen in picture, an indifference map is a collection of multiple indifference curves.
Shape of an Indifference Curve
An indifferent map is made up of three indifference curves: ICI, IC2, and IC3. The indifference curve ICI denotes a lesser degree of satisfaction, while the IC2 represents a greater level, and the IC3 represents the greatest level. To achieve maximum satisfaction, the customer would like to be on the highest indifference curve, assuming all other variables remain constant.