Documente Academic
Documente Profesional
Documente Cultură
A 15 1
B 11 2
C 8 3
D 6 4
E 5 5
INDIFFERENCE CURVE
Y
15 A
Apples
11 B
C
8
D
6 E
5
4
2
X
1 2 3 4 5 Mangoes
INDIFFERENCE MAP
A set of Indifference Curves on a graph showing
combinations of apples and mangoes which represent
greater and lesser satisfaction.
Combination A
is preferred to B.
Combination B is
preferred to D.
Apples
D
B A
IC3
IC2
IC1
Mangoes
MARGINAL RATE OF SUBSTITUTION
Marginal Rate of Substitution shows that at what rate a
consumer is willing to substitute one commodity for
another in his/her consumption pattern.
MRSxy = y
x
MARGINAL RATE OF SUBSTITUTION
A 15 1 ___
B 11 2 4:1
C 8 3 3:1
D 6 4 2:1
E 5 5 1:1
DIMINISHING MARGINAL RATE OF
SUBSTITUTION
As the consumer has more and more units of good X,
he is prepared to forgo less and less of good Y.
16 A
14 MRS = 4
12 -4
B
Apples 10 1
-3
8 C MRS = 2
1
6 -2
D
1 -1 E
4
1
2
1 2 3 4 5
Mangoes
PROPERTIES OF INDIFFERENCE CURVE
Non-intersecting