{"id":1510,"date":"2019-09-26T01:30:14","date_gmt":"2019-09-26T01:30:14","guid":{"rendered":"http:\/\/www.helpingstudents.com.ng\/?p=1510"},"modified":"2019-12-16T21:12:27","modified_gmt":"2019-12-16T21:12:27","slug":"indifference-curve","status":"publish","type":"post","link":"https:\/\/hstutorial.com\/de\/indifference-curve\/","title":{"rendered":"Indifferenzkurve - Definition, Zeitplan und Eigenschaften"},"content":{"rendered":"

The Indifference Curve Analysis approach was first introduced by Slutsky, a Russian Economist in 1915.<\/strong> Later it was developed by J.R. Hicks and R.G.D. Allen in the year 1928<\/strong>.<\/p>\n

What is Indifference Curve?<\/h2>\n

Koutsoyiannis (1985)<\/strong> defines the indifference curve as the locus of points particular combinations or bundles of goods which yield the same utility to the consumer, so that he is indifferent as to the particular combination he consumes.<\/p>\n

Dwivedi (1997)<\/strong> on the other hand, defines it as the locus of points, each representing a different combination of two goods which yield the same utility or level of satisfaction to the consumer so that he is indifferent between any two combinations of goods when it comes to making a choice between them.<\/p>\n

The indifference curve indicates the various combinations of two goods that yield equal satisfaction to the consumer. The theory of consumption is based on the scale of preference and the ordinal ranks or orders of one\u2019s preferences.<\/p>\n

The ordinal utility theory or the indifference curve analysis is based on the assumptions as discussed above. Other names for the indifference curve are the Iso-utility curve; Equal utility curve.<\/strong><\/p><\/blockquote>\n

What is the Indifference Curve Schedule?<\/h2>\n

The indifference curve schedule is the combination of two different commodities that yield exactly the same utility. In the table below there are four columns, the first shows the different combinations of the two commodities, while 2 and 3 showed the various quantities of rice and beans and column 4 shows that the various combinations yield exactly the same level of utility. Hence, the consumer is indifferent to any combination.<\/p>\n

Indifference Schedule<\/h3>\n\n\n\n\n\n\n\n\n
Combination points<\/strong><\/td>\nCommodity Y (Rice)<\/strong><\/td>\nCommodity X (Beans)<\/strong><\/td>\nUtility<\/strong><\/td>\n<\/tr>\n
A<\/td>\n04<\/td>\n16<\/td>\nU<\/td>\n<\/tr>\n
B<\/td>\n07<\/td>\n12<\/td>\nU<\/td>\n<\/tr>\n
C<\/td>\n09<\/td>\n11<\/td>\nU<\/td>\n<\/tr>\n
D<\/td>\n12<\/td>\n10<\/td>\nU<\/td>\n<\/tr>\n
E<\/td>\n17<\/td>\n04<\/td>\nU<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

 <\/p>\n

The Construction of an Indifference Curve:<\/h4>\n

We can use the information in the table above to construct an indifference curve as shown below: The consumer\u2019s preferences can be shown in a diagram with an indifference curve. The indifference curve is showing nothing about the absolute amounts of satisfaction obtained. It merely indicates a set of consumption bundles that the consumer views as being equally satisfactory.<\/p>\n

\"\"<\/span><\/p>\n

Fig above.<\/em><\/strong><\/p>\n

We measure the quantity of rice along the X-axis and beans along the Y-axis. It is shown in the diagram that a consumer may buy 7 kilograms of rice and 12 kilograms of beans or 9 kilograms of rice and 11 kilograms of beans. Both of these combinations are equally preferred by him and he is indifferent to these two combinations.<\/p>\n

When the scale of preference of the consumer is graphed, by joining the points a, b, c, d, e, we obtain an Indifference Curve IC. Every point on the indifference curve represents a different combination of the two goods and the consumer is indifferent between any two points on the indifference curve. All the combinations are equally desirable to the consumer. The consumer is indifferent as to which combination he receives.<\/p>\n

The Indifference Curve IC thus is a locus of different combinations of two goods that yield the same level of satisfaction.<\/p>\n

NOTE:<\/strong><\/p>\n

Question:<\/strong> How is the indifference curve similar or different from the demand curve you learn in study session two?<\/p>\n

Answer:<\/strong> The only similarity is that both curves are negatively sloped, while the following are the differences.<\/p><\/blockquote>\n

    \n
  1. The demand curve shows the relationship between price and quantity purchased, while the indifference curve shows combinations of two products or services<\/li>\n
  2. The demand curve does not necessarily have to be convex to the origin, while the indifference curve must be convex to the origin.<\/li>\n<\/ol>\n

    III. Two demand curves can intersect each other, while two indifference curves cannot intersect each other.<\/p>\n

    Indifference Map<\/h3>\n

    \"\"<\/span><\/p>\n

    Fig above.<\/em><\/strong><\/p>\n

    Shows a whole set of indifference curves which is called an indifference map. An indifference map shows all the indifference curves which rank the preference of the consumer. The further away from each successive indifference curve from the origin, the higher the level of utility it measures. In figure 5.2, four indifference curves IC1, IC2, IC3, and IC4 have been shown.<\/p>\n