This document discusses indifference curve analysis, which is an approach to consumer choice developed by Edgeworth and later preferred by Hicks and Allen. It assumes consumers express preferences over bundles of goods rather than quantities. Consumers are assumed to be rational and choose the bundle that provides the highest satisfaction level. An indifference curve represents combinations of two goods that provide equal satisfaction. The document provides an example indifference schedule and shows how it can be represented graphically with indifference curves, with higher curves indicating greater satisfaction.

2. Indifference curve analysis
0 Developed - Edge worth
0 It was later preferred by J.R Hicks & R.J.D. Allen
0 indifference curve approach is also known as ordinal
utility approach..
0 consumer express their utility in terms of preference
not in term of quantity.

3. ASSUMPTION OF
INDIFFERENCE CURVE
0 A consumer is assumed to buy any two goods in combinations.
0 A consumer can rank the alternative combinations and compare
their level of satisfaction, and he prefers a combination providing
a higher level of satisfaction.
0 Consumer is rational and his choices are transitive.
0 The consumer behavior is assumed to be constant, throughout
the analysis.

4. INDIFFERENCE CURVE
Good Y
0
An indifference curve may be defined as the
locus of various combination of two goods which
yield the same total satisfaction to the consumer
Good X

5. INDIFFERENT SCHEDULE
For eg:
0 The following table shows the indifference schedule of
combination of biscuits and cups of tea for a
consumer.
combination
A
B
C
D
E
F
Cups of Tea
1
2
3
4
5
6
+
+
+
+
+
+
+
Biscuits
50
38
26
21
17
15

6. Graphical representation of indifference schedule…
Y
60
A
BISCUITS
50
40
B
30
C
D
20
E
F
10
00
0
2
4
CUPS OF TEA
6
8
X

7. INDIFFERENCE MAP
A collection of indifference
curve is known as indifference map.
0 A higher indifference curve indicates a
higher level of satisfaction and vise
versa.
Good y
Y
0
0
Ic3
Ic2
Ic1
Good x
X

8. Thanks….