What is the relationship between the indifference curve and the budget line?
A budget line shows combinations of two goods a consumer is able to consume, given a budget constraint. An indifference curve shows combinations of two goods that yield equal satisfaction. To maximize utility, a consumer chooses a combination of two goods at which an indifference curve is tangent to the budget line.Click to see full…
A budget line shows combinations of two goods a consumer is able to consume, given a budget constraint. An indifference curve shows combinations of two goods that yield equal satisfaction. To maximize utility, a consumer chooses a combination of two goods at which an indifference curve is tangent to the budget line.Click to see full answer. Accordingly, is a utility function the same as an indifference curve?The utility function defines the level of utility or satisfaction as a function of the quantities of commodities consumed. An indifference curve shows all of the amounts of goods that give the consumer the same level of satisfaction.Additionally, what happens if indifference curves cross? The indifference curves cannot intersect each other. It is because at the point of tangency, the higher curve will give as much as of the two commodities as is given by the lower indifference curve. Similarly the combinations shows by points B and E on indifference curve IC1 give equal satisfaction top the consumer. Similarly, what is the difference between indifference curve and indifference map? Indifference Map. It refers to a set of indifference curves corresponding to different income levels of the consumer. In an indifference map, indifference curves are parallel and a higher indifference curve represents a higher level of satisfaction.Can indifference curves be straight lines?Indifference curves cannot be straight line. A straight line indifference curve means the goods are perfect substitutes so that the consumer is indifferent between them.
