This document presents a 3-sentence summary of a presentation on indifference curves: The presentation defines indifference curves as loci that represent combinations of two goods that provide the same level of satisfaction to a consumer. It discusses the properties of indifference curves including negative slope, convex shape, non-intersection, and representation of preference with higher curves indicating greater satisfaction. Examples are provided to illustrate concepts like marginal rate of substitution and the law of diminishing marginal rate of substitution.

1. A
PRESENTATION
ON
INDIFFERENCE CURVE
PRESENTED TO : SNEHAL MA’AM
PRESENTED BY : VISHRANTI GAJERA
EN. NO. : 12
STD. : SY I.MBA
SMT. S. H. GAJERA MBA MAHILA COLLEGE
1

2. INDIFFERENCE
CURVE
2

3. DEFINITION: IC
An Indifference curve (IC) is the locus of all those
combination of two goods which give the same
level of satisfaction to the consumer.
In other words, consumer gives equal
preference to all such combinations.
3

4. INDIFFERENCE CURVES
INDIFFERENCE SCHEDULE
Combination Apples Oranges
A 1 22
B 2 14
C 3 10
D 4 8
E 5 7
12
10
8
6
4
2
0
A(1, 22)
B(2,14)
C(3, 10)
24
22
20
18
16
14
D(4,8)E(5,7)
Apples
Oranges
IC1
4

5. MARGINAL RATE OF SUBSTITUTION
(MRS)
The marginal rate of substitution of X for Y (MRSxy)
is defined as the amount of Y, the consumer is just
willing to give up to get one more unit of X and
maintain the same level of satisfaction.
MRSMRSxyxy
=
Decrease in the Consumption of Y
Increase in the Consumption of X
= (-) ∆Y
∆X
5

6. DIMINISHING MARGINAL RATE OF
SUBSTITUTION
Combination Apples Oranges MRS
A 1 22 ---
B 2 14 8:1
C 3 10 4:1
D 4 8 2:1
E 5 7 1:1
As the consumer increases the consumption of
apples, then for getting every additional unit of
apples, he will give up less and less of oranges, that
is, 8:1, 4:1, 2:1, 1:1 respectively This is the Law of
Diminishing MRS. 6

7. LAW OF DIMINISHING MRS
MRS is measured
by the slope of
the indifference
curve
MRS = -∆O/∆A = 8:1
12
10
8
6
4
2
0
1 2 3 4 5
A
B
C
24
22
20
18
16
14
D
E
Apples
Oranges
IC1
MRS = 2:1
MRS = 4:1
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8. PROPERTIES OF IC
1. An Indifference curve has negative slope
i.e. it slope downwards from left to right.
2. Indifference curve is always convex to the
origin.
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9. PROPERTIES OF IC
3. Two Indifference curves
never each other.
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10. PROPERTIES OF IC
4. Higher indifference curve
represents higher satisfaction.
More is preferred to Less
Indifference map
10

11. PROPERTIES OF IC
5. Indifference curve touches
neither X-axis nor Y-axis.
12
10
8
6
4
2
0
1 2 3 4 5
Apples
Oranges IC1
A(0, 10)
X
11

12. CONCLUSION
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13. 13