What is an Indifference Curve? – Explained!

The consumer has no special inclination towards any particular combination of goods. When all such combinations are plotted on the graph and joined together with the help of a curve, we get an indifference curve as shown in Fig. 5.1.

In Fig. 5.1, good ‘X’ is measured along the horizontal axis, while good ‘Y’ is measured along the vertical axis. Each of the six combinations of the two goods is represented by a single point on the curve in the figure.

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The various combinations of the two goods are equally acceptable to the consumer and he prefers none of them to any of the other. Therefore, he can slide up or slide down the indifference curve and choose any point on the curve.

If he chooses one point, he becomes indifferent to the others. An indifference curve is also known as iso-utility curve, as every point on the indifference curve represents the same utility to the consumer.

Stonier and Hague have compared this curve with a contour line on a map which shows all places of the same height above sea-level. Instead of representing height, indifference curve represents a level of satisfac­tion.

However, in one respect this geographic analogy does not hold. A contour line on an ordinary map is labeled by a number indicating the heights of its points above sea level. But, in an indifference curve, there is no cardinal utility number to indicate the corresponding height of the utility surface lying directly above the indifference curve.

Therefore, indifference curves do not provide enough information to draw the utility surface, though these can be deduced from the consumer’s utility surface.

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