Indifference curves help us understand how people make choices between different products and services. These curves show the different ways two goods can be combined while giving the same satisfaction.
Shape: Indifference curves usually slope downwards and are curved. This means that if a person wants more of one good, they must give up some of another good to feel just as satisfied.
Higher Curves: Curves that are higher on the graph represent better satisfaction levels. They show that a person prefers to have more of both goods.
Marginal Rate of Substitution (MRS): This tells us how much of one good a person is willing to give up for more of another good. It’s found by looking at how steep the curve is.
Let’s say someone feels the same about having 3 units of Good A and 4 units of Good B. This combination would be on the same indifference curve. It helps us see how people value different products better.
Indifference curves help us understand how people make choices between different products and services. These curves show the different ways two goods can be combined while giving the same satisfaction.
Shape: Indifference curves usually slope downwards and are curved. This means that if a person wants more of one good, they must give up some of another good to feel just as satisfied.
Higher Curves: Curves that are higher on the graph represent better satisfaction levels. They show that a person prefers to have more of both goods.
Marginal Rate of Substitution (MRS): This tells us how much of one good a person is willing to give up for more of another good. It’s found by looking at how steep the curve is.
Let’s say someone feels the same about having 3 units of Good A and 4 units of Good B. This combination would be on the same indifference curve. It helps us see how people value different products better.