The document defines an indifference curve as a set of combinations of two goods that provide the same level of utility or satisfaction to a consumer. It assumes consumers have a fixed budget to spend on two goods with constant prices. Indifference curves depict combinations of goods that yield equal satisfaction based on ordinal utility. They have the properties of downward sloping, convex shape, and not intersecting, with higher curves representing greater satisfaction. The marginal rate of substitution along a curve diminishes as the consumer trades one good for another to maintain the same utility.

1. INDIFFERENCE CURVE
P.Pandidurai M.A., M.phil.,
Assistant Professor
Prof.Dhanapalan College of Arts and Science

2. Meaning
 A Basket of two commodity Which yield
same level of Utility or Satisfaction to The
Consumer
 All combinations of two goods which yield
the same level of satisfaction (utility) to
the consumers.

3. Assumptions of indifference curve
Two commodities
It is assumed that the consumer has fixed amount of
money, all of which is to be spent only on two goods. It
is also assumed that prices of both the commodities are
constant.
Ordinal utility
the theory assumes that a consumer can express
utility in terms of rank. Consumer can rank his/her
preferences on the basis of satisfaction yielded from
each combination of goods

4. cont…
 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 same level of
utility as the first one.
 Rational consumers
According to this theory, a consumer always behaves in a rational
manner, i.e. a consumer always aims to maximize his total satisfaction or
total utility.

5. Table: Indifference schedule
Table: Indifference schedule
Combination Mangoes Oranges Satisfaction
A 1 14 100
B 2 9 100
C 3 6 100
D 4 4 100
E 5 2.5 100

6. Diagram

7. Properties of indifference curve
 Indifference curve slope downwards to right

8. Properties of indifference curve
 Indifference curve is convex to the origin

9. Indifference curve is convex to the origin

10. Indifference curve cannot intersect each
other

11. Higher indifference curve represents higher
level of satisfaction

13. Thank You