What is indifference curve?

The Indifference curve is a device that has been used to replace the cardinal utility concept. It was given by PROF.  J. R.  HICKS.

 MEANING

 An indifference curve is a graph showing combination of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

 It measures utility ordinally.  It explains consumer behaviour in terms of his preferences or rankings for different combination of two goods. An indifferent curve is drawn from the indifference schedule of the consumer. 

 Indifference schedule shows the various combinations of the two commodities such that the consumer is indifferent to those combinations. 

 DEFINITION

According to Watson, " An indifference schedule is a lis of combinations of two commodities,  the list being so arranged that a consumer is indifferent to the combinations,  preferring none of any other.


ILLUSTRATION

 Let us illustrate the concept of indifference curve with the help of an imaginary indifference schedule and graph.
 Draw the table.

In the above table the consumer is indifferent whether he buys the first combination of units of 18Y+1X or the fifth combination of 1Y+5X or any other combination.  All combinations give him equal satisfaction.

Draw the diagram.

If the various combinations are plotted on a diagram and are joined by a line this becomes an indifference curve,  as shown in the above figure. The indifference curve I is the locus of the points L, M, N, P, Q And R,  showing the combinations of the two goods x and y between which the consumer is indifferent. It is infected an iso-utility curve showing equal satisfaction at all its points.

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