Page 51 - DECO401_MICROECONOMIC_THEORY_ENGLISH

Microeconomic Theory

Notes Table 1: Indifference Schedule

Combination of Apples Oranges
Orange and Apple
A 1 10
B 2 7
C 3 5

D 4 4

The above schedule shows that the consumer gets equal satisfaction from all the four combinations
A, B, C, D of apples and oranges. In combination A, the consumer has 1 apple plus 10 oranges, in
combination B, he has 2 apples plus 7 oranges, in combination C, he has 3 apples plus 5 oranges
and in combination D, he has 4 apples plus 4 oranges. The consumer in order to have more apples,
sacrifices some quantity of oranges in such a way that there is no change in the level of satisfaction
out of each combination.

4.3 Graphical Presentation of Indifference Curve

Indifference curve is graphical presentation of indifference schedule. Based on table 1, indifference
curve is shown in Fig. 4.1. In this diagram, quantity of apple is shown on axis OX and quantity of
orange is shown on axis OY. IC is an indifference curve. Different points A, B, C and D on it indicate
those combinations of apples and oranges which yield equal satisfaction to the consumer. Therefore, it
is also known as Iso-utility curve.

Fig. 4.1

Y
IC Indifference
10 A(1, 10) Curve
9
8 B(2, 7)
7
Oranges 6 C(3, 5)
5
D(4, 4)
4
3 IC
2
1
O X
1 2 3 4 5
Apples

Self Assessment

Fill in the blanks:
1. Indifference means ............... from one point to another on a curve itself.

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