Understanding Indifference Curves

Front

What is an indifference curve?

Back

An indifference curve is a graphical representation of different combinations of two goods that yield the same level of utility for a consumer.

Front

How do indifference curves illustrate consumer preferences?

Back

Indifference curves illustrate consumer preferences by showing combinations of goods that yield equal satisfaction, indicating trade-offs between them.

Front

What does it mean if two indifference curves intersect?

Back

It indicates a contradiction in consumer preferences.

Front

Explain the concept of marginal rate of substitution.

Back

The marginal rate of substitution is the rate at which a consumer is willing to substitute one good for another while keeping utility constant.

Front

How do changes in income affect the position of indifference curves?

Back

Changes in income shift indifference curves outward with increased income and inward with decreased income.