BackIndifference Curves definitions
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1/15BackSkip to main contentBackIndifference Curve
Graphical representation of combinations of goods yielding equal satisfaction for a consumer, regardless of cost. Utility
Measure of satisfaction or happiness derived from consuming goods, often quantified in abstract units. Marginal Utility
Increase in satisfaction from consuming one additional unit of a good, typically decreases as consumption rises. Law of Diminishing Returns
Principle stating that as more of a good is consumed, the extra satisfaction from each additional unit declines. Consumption Bundle
Specific combination of quantities of different goods chosen by a consumer. Util
Abstract unit used to quantify satisfaction or happiness from consumption. Indifference Curve Map
Collection of multiple indifference curves representing various satisfaction levels for a consumer. Marginal Rate of Substitution
Slope of an indifference curve at a point, indicating how much of one good a consumer will trade for another to maintain satisfaction. Budget Constraint
Limit on consumption bundles imposed by a consumer’s income and the prices of goods. Downward Sloping
Characteristic of indifference curves where increasing one good requires decreasing the other to keep satisfaction constant. Bowing Inwards
Curvature of indifference curves reflecting greater willingness to trade when one good’s quantity is low. Higher Indifference Curve
Curve representing greater satisfaction and preferred by consumers compared to lower curves. Lower Indifference Curve
Curve representing less satisfaction, less preferred by consumers compared to higher curves. Absolute Value
Positive numerical value used when calculating the slope of an indifference curve, regardless of direction. Origin
Point on a graph where the quantities of both goods are zero, used as a reference for plotting consumption bundles.
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