An indifference curve shows combinations of goods that give a consumer the same level of satisfaction or utility. It is normally drawn as convex to the origin to reflect the assumption that as consumption of a good increases, the marginal utility from additional units decreases. Points on the same indifference curve represent combinations that are indifferent to the consumer, while higher indifference curves correspond to greater total utility or satisfaction.

2. What is an indifference curve?
• An indifference curve shows combinations of goods and
services between which a consumer is indifferent
• In other words, each combination on an indifference
curve gives the consumer the same total satisfaction
• An indifference curve is normally drawn as convex to the
origin
• This reflects the assumption of the law of diminishing
marginal satisfaction / marginal utility
• I.e. as we consume extra units of something, the extra
utility falls, total utility rises at a diminishing rate
• Combinations of products on an indifference curve further
from the origin are assumed to give greater total utility

3. An indifference curve
IC1
Sausages
Chicken
Wings

4. An indifference curve
IC1
Sausages
Chicken
Wings
B
C
A
The consumer is indifferent
between all three
combinations because they
each lie on the same
indifference curve.

5. An indifference curve
IC1
Sausages
Chicken
Wings
B
C
A
C and D give the consumer
the same total satisfaction.
Therefore, the marginal
utility of increasing
consumption of chicken
wings from C to D is zero
D

6. An indifference curve
IC1
Sausages
Chicken
Wings
B
C
A
Likewise, combinations A
and E give the consumer the
same total satisfaction.
D
E

7. An indifference curve
IC1
Sausages
Chicken
Wings
B
C
A
Likewise, combinations A
and E give the consumer the
same total satisfaction.
When an indifference curve
is vertical, then marginal
utility is zero.
D
E

8. An indifference curve
IC1
Sausages
Chicken
Wings
IC2
IC3
Indifference curves cannot
intersect.
IC3 gives a higher total
satisfaction than IC1
IC1 is preferred to IC2