Indifference Curve Definition
An indifference curve is a graph showing combinations of two goods that give a consumer equal satisfaction. The consumer's utility is the same at any point on the curve. It's used in microeconomics to illustrate consumer preferences and budget constraints. The curve's slope, called the marginal rate of substitution, represents the rate a consumer is willing to trade one good for another.
Properties of Indifference Curves
Indifference curves show a consumer's preferences for various goods combinations. Each point on the curve represents a bundle of goods that provides equal consumer satisfaction. The curves have three characteristics: they slope downwards, they don't cross, and they're convex to the origin.
Indifference Curve Example
For instance, if a consumer likes apples and bananas, an indifference curve could show that they're equally satisfied with 2 apples and 4 bananas, 3 apples and 3 bananas, or 4 apples and 2 bananas. The shape of the curve depends on the consumer's preferences and the goods' relationship.