Indiference Curve Analysis, PPT
Indiference Curve Analysis, PPT
Indiference Curve Analysis, PPT
Curve Analysis
IT’S A “ZENITH” PRESENTATION
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Outline of the Presentation
What is Indifference Curve??
Properties of Indifference curve.
Consumer Equilibrium.
Income Effect.
Income Consumption curve.
Price Effect.
Price Consumption Curve.
Substitution Effect.
Conclusion.
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What is Indifference Curve??
An Indifference Curve is defined as the
locus of points each representing a
different combination of two substitute
goods, which yield the same utility or
level of satisfaction to the customer.
An Indifference Curve is also called as Iso-
utility curve and Equal utility curve.
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Example:Indifference Curve Analysis
A consumer consumes two goods A and B
and he makes five combinations a,b,c,d
and e of the two substitute commodities.
Combinations Units of Commodity Units of Commodity
Total
A B Utility
a = 25 3 u
b = 15 5 u
c = 8 9 u
d = 4 17 u
e = 2 30 u
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If the consumer
had greaterIndifference Curves
income,
30
more of either or
both25products
15
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Quantity of A
3 5 9 12 17 30
Quantity of B
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Indifference Curves: Properties
Indifference curve have a negative
slope.
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Income Consumption Curve
Income Consumption Curve is
defined as a curve that joins
different equilibrium points when
the income of the consumer
changes with fixed price.
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Price Effect
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Price Consumption Curve
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Substitution Effect
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Conclusion
The indifference curve indicates
what the consumer is willing to buy
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