Indifference
Curve:
It is a locus of all such points which shows different
combination of two commodities which yield equal satisfaction to the consumer ,
so that he is indifferent to the particular combination he consumes.
Eg: if I am taking one apple its giving me 1 util, at
the same time if I taking 10 oranges its giving me 1 util , for better
understanding let me show one table.
|
Combination of apple & oranges
|
Apples
|
Oranges
|
|
A
|
1
|
10
|
|
B
|
2
|
7
|
|
C
|
3
|
5
|
|
D
|
4
|
4
|
Consumer surplus:
The difference between the amount consumer willingly and able to pay to
buy any goods or services and the amount consumer actually pays to buy the
products and services.
Example 1:
I went to shop to purchase a T shirt the seller said it costs 800
rs I negotiate for 600 rs here the consumer surplus is 200 rs i.e.(800-
600)=200
Example 2:
When I was in intermediate I went to purchase a second hand bike
the seller said it costs 66,500 rs I negotiate for 63,000. Here the consumer
surplus is 3,500 rs i.e.(66,500-63,000)
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