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Economics

Student Videos

Indifference Curves

Level:
A Level, IB
Board:
OCR, IB, Eduqas, WJEC

An indifference curve shows combinations of goods and services between which a consumer is indifferent

  • In other words, each combination on an indifference curve gives the consumer the same total satisfaction
  • An indifference curve is normally drawn as convex to the origin
  • This reflects the assumption of the law of diminishing marginal satisfaction / marginal utility
  • I.e. as we consume extra units of something, the extra utility falls, total utility rises at a diminishing rate
  • Combinations of products on an indifference curve further from the origin are assumed to give greater total utility
Indifference Curves
Indifference curves

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