Question

Explain an indifference map with the help of a diagram.

Answer 1

Diagram Shows such an indifference map consisting of various indifference curve IC₁, IC₂, IC₃ and IC₄. Each indifference curve represents different level of satisfaction. All the points on a particular indifference curve indicate alternative combinations of food and clothing that give the household equal amount of satisfaction. The further the curve from the origin, the higher is the level of satisfaction it represents. For example, IC₃ is a higher indifference curve than IC₂, which means that all points on IC₃ yield a higher level of satisfaction than the points on IC₂.