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24 February, 2016 - 16:12

Indifference curves show the combinations of two goods that an individual would be willing to buy, and which would make him/her equally satisfied (or indifferent). Indifference curves assume that more is preferred to less. They are convex as seen from the origin. The indifference curves form an entire map of various levels of satisfaction.

Figure 3.6 Indifference curves

The shopping list of any consumer would reveal that, beyond some minimum basic necessities, purchases are a matter of choosing between various items that can provide equivalent satisfaction. This pattern of equivalent satisfaction from the consumption of two selected goods is what an indifference curve portrays.