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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

What point is preferred along an indifference Curve?

To determine

To find: The point preferred in an indifference curve.

Explanation

All the points on an indifference curve give the same level of utility or satisfaction to the consumer and each point shows the combination of two goods. A consumer will be in equilibrium at a point where his budget line is tangent to the indifference curve. At this point, the slope of the indifference curve and slope of the budget line is the same. Any point above or outside indifference curve are not affordable for the consumer’s budget. While any point below the indifference curve is inferior to his approach.

So, the consumer will prefer a point on the indifference curve which is tangent to the budget line.

Concept

Indifference Curve: This is a curve which represents all the possible combinations of two commodities which provides equal satisfaction to the consumer. The consumer has no reason to prefer one combination to any other combination on the same curve. So, this curve is the indifference curve.

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