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Convex preferences imply that the indifference curves cannot be concave to the origin, i.e. they will either be straight lines or bulge toward the origin of the indifference curve. If the latter is the case, then as a consumer decreases consumption of one good in successive units, successively larger doses of the other good are required to keep ...
Concave preferences are the opposite of convex, where when , the average of A and B is worse than A. This is because concave curves slope outwards, meaning an average between two points on the same indifference curve would result in a point closer to the origin, thus giving a lower utility. [25]
The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves.It analyzes how consumers maximize the desirability of their consumption (as measured by their preferences subject to limitations on their expenditures), by maximizing utility subject to a consumer budget constraint. [1]
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. Convex ...
An example indifference curve is shown below: Each indifference curve is a set of points, each representing a combination of quantities of two goods or services, all of which combinations the consumer is equally satisfied with. The further a curve is from the origin, the greater is the level of utility.
The indifference curves are L-shaped and their corners are determined by the weights. E.g., for the function min ( x 1 / 2 , x 2 / 3 ) {\displaystyle \min(x_{1}/2,x_{2}/3)} , the corners of the indifferent curves are at ( 2 t , 3 t ) {\displaystyle (2t,3t)} where t ∈ [ 0 , ∞ ) {\displaystyle t\in [0,\infty )} .
Individual preferences can be represented as an indifference curve given the underlying assumptions. Indifference curves graphically depict all product combinations that yield the same amount of usefulness. Indifference curves allow us to graphically define and rank all possible combinations of two commodities. [28] The graph's three main ...
The indifference curves are straight lines (when there are two goods) or hyperplanes (when there are more goods). Each demand curve (demand as a function of price) is a step function : the consumer wants to buy zero units of a good whose utility/price ratio is below the maximum, and wants to buy as many units as possible of a good whose utility ...