INDIFFERENCE CURVE

INDIFFERENCE CURVE

The three assumptions of consumer preferences are now used to develop a theory of preference - indifference. To begin with, the consumer is given the opportunity of ranking all combinations of  X and  Y included in commodity set and plotted in X-Y plane with reference to  any initial combinations. For example, the consumer is asked to rank all commodities bundles compared to say, commodity bundle C containing (x,y) into three groups 

1. All commodity bundles which are preferred to the initial buldle C
2. All commodity bundles which are less preferred to C
3. All commodity bundles which are as good as C i.e; commodity bundles which are equally liked by the consumer