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Indifference curve analysis is a purely technological model which cannot be used to model consumer behaviour. Every point on any given indifference curve must be satisfied by the same budget (unless the consumer can be indifferent to different budgets).
Blue curve of Pareto efficient points, at points of tangency of indifference curves in an Edgeworth box.If the initial allocations of the two goods are at a point not on this locus, then the two people can trade to a point on the efficient locus within the lens formed by the indifference curves that they were originally on.
Whether indifference curves are primitive or derivable from utility functions; and; Whether indifference curves are convex. Assumptions are also made of a more technical nature, e.g. non-reversibility, saturation, etc. The pursuit of rigour is not always conducive to intelligibility. In this article indifference curves will be treated as primitive.
A community indifference curve is an illustration of different combinations of commodity quantities that would bring a whole community the same level of utility. The model can be used to describe any community, such as a town or an entire nation.
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...
A set of convex-shaped indifference curves displays convex preferences: Given a convex indifference curve containing the set of all bundles (of two or more goods) that are all viewed as equally desired, the set of all goods bundles that are viewed as being at least as desired as those on the indifference curve is a convex set.
The indifference curves are L-shaped and their corners are determined by the weights. E.g., for the function (/, /) , the corners of the indifferent curves are ...
If indifference curves for purchases be thought of as possessing a wavy character, convex to the origin in some regions and concave in others, we are forced to the conclusion that it is only the portions convex to the origin that can be regarded as possessing any importance, since the others are essentially unobservable.