What Is an Indifference Curve?

The indifference curve is a concept in economics. It refers to such a curve. At each point above it, the combination of goods is different, but it means that the degree of utility that people get from it is the same.

Indifference curve

An indifference curve is a line that shows the same degree of utility brought to consumers by different quantities of two items at all points on the line. ^[1]

The indifference curve is for a particular investor, according to his

The so-called indifference curve is the trajectory of points representing different quantity combinations of two kinds of goods that can bring the same degree of satisfaction to consumers.

Because every point on the same indifference curve represents

The indifference curve has the following four basic properties:

(1) Since the utility function is generally assumed to be continuous, there can be an infinite number of indifference curves between any two indifference curves on the same coordinate plane. The correlation between all these indifference curves is: the higher the utility level represented by the indifference curve the farther away from the origin, the lower the utility level represented by the indifference curve closer to the origin.

(2) Any two indifference curves on the same coordinate plane will not intersect. The two indifference curves intersect at point a. This drawing is wrong. The reason is that according to the definition of indifference curve, from indifference curve 1, the utility levels of two points a and b are equal, and from the indifference curve 2, the utility levels of two points a and c are equal . So, according to

First, the indifference curve is a line that slopes to the lower right.

1. The slope of the indifference curve of the complete substitute is a negative constant. A complete substitute is a situation where the replacement ratio between two commodities is fixed. In the case of complete substitution, the marginal substitution rate between two commodities is a constant, and the corresponding indifference curve is a straight line with a constant slope.

2. The slope of the indifference curve of the completely complementary product does not exist. Fully complementary products refer to the situation where two products must be used simultaneously in a fixed ratio. Therefore, in the case of complete complementarity, the corresponding indifference curve is rectangular.

3. The slope of the indifference curve for aversive products (one of the two products) is positive. If both products are aversive products, the indifference curve is negative (similar to the general indifference curve).

4. The slope of the indifference curve for neutral products is 0 or does not exist.

5.Cobb-Douglas U (X1, X2) = X1X2 The slope of the indifference curve is -cX2 / dX1

^[2]

6. Tiredness preference: A consumer will have a tiredness preference for two products, which means that a consensus point appears in the first quadrant, and an indifference curve will surround this tiredness point and a closed curve will appear. It embodies the preference characteristics of "being too late" and "being too late". (That is, around a maximum point of utility, there are many circles scattered, and each circle gradually decreases the utility from the inside to the outside)