Gain Immediate access to our Essays
FREE access exchanged for your work, or pay £9.99
... I will measure food on the horizontal axis and clothing on the vertical axis. Lastly, not all the figures here are drawn to scale. II. INDIFFERENCE CURVE ANALYSIS A) Indifference Map Since a certain level of satisfaction is resulted from consuming goods and consumers have the ability to show their preferences (one combination over the other or two or more bundles being considered to be providing the same level of satisfaction, making him/her indifferent), an indifference curve can be drawn by joining all the combinations of bundles that a consumer sees as indifferent. By forming a set of indifference curves, the result is an indifferent map. Figure 1.1 shows three indifference curves µ1, µ2 and µ3. Note that I will stick to the four assumptions that were mentioned in Pindyck and Rubinfeld's "Microeconomics": 1) Completeness 2) Transitivity 3) More is better than less 4) Diminishing marginal rate of substitution. Therefore all the three indifference curves ...