1. An indifference curve represents combinations of two goods that provide a consumer with equal satisfaction or utility. 2. Indifference curves have specific properties - they slope downward, are convex to the origin, and do not intersect with each other. Higher indifference curves represent greater satisfaction. 3. The indifference curve theory is based on assumptions including that the consumer has a fixed budget to spend on two goods, has not reached satiety, can rank utilities ordinally, and has a diminishing marginal rate of substitution between goods.

1. INDIFFERENCE CURVE
- Pulkit Choudhary

2. Indifference
Curve
Indifference curve may be defined as
locus of points, each representing a
different combination of two substitute
goods, which yield the same utility or
level of satisfaction to the consumer.
• Explains behavior of consumer in terms of his
preferences.
• An indifference curve is a graph showing
combination of two goods that give the consumer
equal satisfaction and utility.
• Each point on an indifference curve indicates
that a consumer is indifferent between the two
and all points give him the same utility.

3. Combination Units of Y Units of X Total Utility
A 25 3 U
B 15 6 U
C 8 9 U
D 4 12 U
E 2 15 U
Indifference Curve
Indifference Map
 Indifference curve is derived from indifference schedule.

4. Properties Of Indifference
Curve
 Negatively sloping/Slope downwards.
 Convex to the origin.
 Never intersect with one another.
 Higher the indifference curve represent a higher level of
satisfaction.

5. .
1. Indifference Curve Slope
Downwards to Right:
• An indifference curve can neither be horizontal line
nor an upward sloping curve. This is very important.
• When a consumer wants to have more of a commodity,
he/she will have to give up some of the other
commodity, given that the consumer remains on the
same level of utility at constant income.
• As a result, the indifference curve slopes downward
from left to right.

6. .
2. Indifference Curve is Convex to
the Origin:
• It is This is an important property of indifference curves.
They are convex to the origin (bowed inward). This is
equivalent to saying that as the consumer substitutes
commodity X for commodity Y, the marginal rate of
substitution diminishes of X for Y along an indifference
curve.
• In this figure as the consumer moves from A to B to C to D,
the willingness to substitute good X for good Y diminishes.
This means that as the amount of good X is increased by
equal amounts, that of good Y diminishes by smaller
amounts. The marginal rate of substitution of X for Y is the
quantity of Y good that the consumer is willing to give up
to gain a marginal unit of good X. The slope of IC is
negative convex to the origin.

7. .
3. Indifference Curve Cannot
Intersect Each Other:
• Each indifference curve is a representation of
particular level of satisfaction.
• The level of satisfaction of the consumer for any
given combination of two goods is same throughout
the curve, that's why indifference curve cannot
intersect each other.

8. .
4. Higher Indifference
Curve Represents Higher
level of Satisfaction:
• Higher the indifference
curves, higher will be the
level of satisfaction. This
means any combination of
two goods on the higher
curve give higher level of
satisfaction to the consumer
then the lower one.

9.  Assumptions of Indifference Curve
The indifference curve theory is based on some
assumptions. These assumptions are –
•Two Commodities: It is assumed that the consumer has fixed
amount of money, all of which is to be spent only on two goods
while prices of both goods are constant.
•Non Satiety: Satiety means full satisfaction. Indifference curve
theory assume that the consumer has hot yet reached the point of
satiety. It implies that the consumer still has the will to consume
more of both the goods.
❖ Ordinal Utility: According to this theory, utility
is a psychological phenomenon and thus it is
unquantifiable. However, the theory assumes that a
consumer can express utility in terms of rank. The
consumer can do it by the basis of satisfaction
yielded from each combination of goods.
•Diminishing Marginal Rate of Substitution: Marginal rate of
substitution may be defined as the amount of a commodity that a
consumer is willing to trade off for another commodity, as long as
the second commodity provides the same level of utility as the first
one.
•Rational Consumer: A consumer always behaves in a rational
manner, .e. a consumer always aims to maximize his total
satisfaction.

10. .
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