Indifference curve

Indifference curves: The indifference curve represents the consumer’s preferences that gives him the same amount of satisfaction. The union of the points in the graph outlines a curve along which the level of utility or satisfaction is constant. For example, in the graph down here, there is the good “bread” on the vertical axis and the good “meat” on the horizontal one. The two points B and C are related to different combinations of the goods, called “bundles”, and both of them have the same level

1. A typical indifference curve The consumer is indifferent between combinations A (4food and 45clothing) and B (6food and 30 clothing). Thus the rate at which the consumer is willing to substitute is MRS = ΔY/ΔX = 45 - 30 / 4 - 6 = - 7.5 The MRS is 7.5, meaning that the consumer is willing to give up 7.5 units of clothing for each unit of food added. 4. Indifference curves are the further from the origin, the greater level of utility associated with the curve. Combinations

both income and leisure yield utility, everyone has their own indifference curve between income and leisure, depending on personal preferences. An indifference curve is constituted by a set of combinations of income and leisure hours that yield the same level of utility. Indifference curves are downward sloping and convex to the origin. They are parallel to each other- they do not intersect. The distance between an indifference curve and the origin indicates the utility level of the individual,

with indifference analysis. Utility is the satisfaction that people earn from the consumption of a certain quantity of a product (Mankiw and Taylor, 2014). Marginal utility is the additional satisfaction that customer gains from consuming one extra unit within a given period of time. However, the more of a product a person consumes, the less additional utility they are able to gain from that extra unit. Understanding this situation, economists come up with indifference analysis. Indifference analysis

Supplement to Unit - II BEHIND THE DEMAND CURVE: THE THEORY OF CONSUMER CHOICE Here, the purpose is to explain the derivation of the demand function and to provide an understanding of the consumer decision-making process. Consumer Preferences Individuals make choices based on their personal tastes and preferences. Tastes and preferences are shaped by many factors. Some of the factors are family environment, physical condition, age, sex, education, religion, and location. In the analysis that

1. Evaluate the consequences of offering a single ticket for the concert series either in addition to, or in place of, offering the tickets for each concert separately. The primary aim here should be to maximize profit. Below table gives the Willingness –to-pay of Concert Patrons: Case 1: Only Bundling Bundle at $50- This is the maximum that the last two categories of patrons are ready to pay. Hence, the revenue we get is $200. Bundle at $60- Only the top two categories of patrons are ready

These choices appear when a consumer is exposed to two goods, where a given amount of one good substitutes the use of another one. To calculate how a consumer can achieve the optimal allocation of the two goods, an indifference curve is used and the analysis of an indifference curve can be combined with the budget constraint. For the consumer, some combinations are better than others for maximising utility, and the best combination is the optimal combination. Consumers have preferences about the

Chapter 2 1. A consumer prefers more to less of every good. Her income rises, and the price of one of the goods falls while other prices stay constant. These changes must have made her better of. TRUE 2. A decrease in income pivots the budget line around the bundle initially consumed. FALSE 3. If all prices are doubled and money income is left the same, the budget set does not change because relative prices don 't change. FALSE 4. If all prices double and income triples, then the

Introduction It is believe that child benefits are quite important for parents to cope with the cost of rearing their children. The Cambridge Dictionary (2015) has defined child benefit as ‘money received regularly by families from the government to help pay for costs of taking care of children’. In the United Kingdom, the government has changed the child benefits policy in 2013. Child benefits are no longer available to every household. Individuals who earn above £50,000 a year will lose some

The old saying goes “talk is cheap” but if this is the case why do we spend so much money on pay monthly mobile contracts. In recent years there has been an increasing trend in people using data on their phone rather than using them to do as they were intended for; to make phone calls. This paper will analyse just why people are willing to spend money on having a greater amount of talk minutes instead of going with cheaper contracts which include more data and how these preferences are changing over