Indifference curve and budget line

it consists of concept, features and schedule and curve of Indifference Curve

1. INDIFFERENCE
CURVE
PRESENTED BY:-
DR. JYOTI KHARE
ASSOCIATE PROFESSOR
GOVT. P. G. COLLEGE
MALDEVTA, (RAIPUR)
DEHRADUN

2. Indifference Curve
Newanalysis/Substitutionanalysis
Preferenceapproachtoconsumerbehaviour
Uisinherentandsubjective
AssociatedwiththenameofJ.R.Hicksand
R.J.DAllen
Contentwiththefactoftheconsumer’s
Preferences.

3. ASSUMPTIONS…….
Consumer is not interested in one commodity at a particular time
The consumer while spending money on goods act in a rational income
(2) There are two goods X and Y.
(3) The consumer possesses complete information about the prices of the goods in the
market.
4) The prices of the two goods are given.
(5) The consumer’s tastes, habits and income remain the same throughout the analysis.
(6) He prefers more of X to less of У or more of Y to less of X.
(7) An indifference curve is negatively inclined sloping downward.

4. Schedule

5. PROPERTIES OF INDIEERENCE CURVE
Indifferencecurveslopesdownwardfromlefttoright.
Indifferencecurveareconvextoorigin.
TwoIndifferencecurvecannottouchorintersect
eachother.
HigherIndifferencecurverepresentshigherlevelof
satisfaction.
Indifferencecurveneednottobeparalleltoeach
other.(DuetoOrdinal,marginalrateof2comd.Not
same,IC–nowidth)

6. Indifference Map
(Collection of indifference curves and represents a higher level of satisfaction)
TheIndifference Mapis the graphical representation of two or moreindifference
curvesshowing the several combinations of different quantities of commodities,
which consumer consumes, given his income and the market price of goods and
services

7. Budget line
Abudget lineshows the combinations of two products that a consumer can afford to buy
with a given income –using all of their availablebudget.
Let us understand the concept ofBudget linewith the help of anexample: Suppose, a
consumer has an income of 2000. He wants to spend it on two commodities: X and Y,
where each is priced at 1000. Now, the consumer has three options to spend all of his
income: 1. Buy 2 units of X,
2. Buy 2 units of Y,
or 3. ONE UNIT OF BOTH

8. BUDGET LINE
Budget lineshould betangentto theindifference curve
Consumer's equilibrium is based on the assumption that the income of a consumer is
constant and that he spends his entire income on purchasing two goods whose prices are
given.Budget lineshould betangentto theindifference curve

9. THANK YOU