what is an indifference curve 
an indifference curve is a chart showing various combinations of two goods or commodities that consumers can choose points along the curve represent combinations that will leave the consumer equally well off a consumer is indifferent to changes in a combination as long as it falls somewhere along the curve look at this indifference curve you may be indifferent to buying a combination of 14 hot dogs and 20 hamburgers a combination of 10 hot dogs and 26 hamburgers or a combination of nine hot dogs and 41 hamburgers if you like both hot dogs and hamburgers each of these three combinations provides the same utility image by julie bang investopedia 2019investopedia paige mclaughlinunderstanding indifference curvesstandard indifference curve analysis operates using a simple two dimensional chart each axis represents one type of economic good a consumer will have no preference between any of the combinations of goods represented by points on the curve because the combination of goods on an indifference curve provides the same level of utility to the consumer a young boy might be indifferent between possessing two comic books and one toy truck or four toy trucks and one comic book both of these combinations would be points on an indifference curve of the young boy indifference curves are heuristic devices that are used in contemporary microeconomics to demonstrate consumer preference and the limitations of a budget economists have adopted the principles of indifference curves in the study of welfare economics some economists argue that the concept of indifference is hypothetical and therefore incompatible with real life economic actions taken by consumers every action indicates a preference not indifference people s relative preferences have been found to change over time and depending on their social context indifference curve analysisthe slope of the indifference curve is known as the marginal rate of substitution mrs the mrs is the rate at which the consumer is willing to give up or substitute one good for another a consumer who values apples will be slower to give them up for oranges and the slope will reflect this rate of substitution each indifference curve is typically convex to the origin and no two indifference curves ever intersect consumers are always assumed to be more satisfied when they re achieving bundles of goods on indifference curves that are farther from the origin an individual will typically shift their consumption level as their income increases because they can afford more commodities they ll end up on an indifference curve that s farther from the origin as a result and hence better off many core principles of microeconomics appear in indifference curve analysis including individual choice marginal utility theory income substitution effects and the subjective theory of value indifference curve analysis emphasizes marginal rates of substitution mrs and opportunity costs it typically assumes that all other variables are constant or stable 1most economic textbooks build upon indifference curves to introduce the optimal choice of goods for any consumer based on that consumer s income classic analysis suggests that the optimal consumption bundle takes place at the point where a consumer s indifference curve is tangent with their budget constraint criticisms and complications of the indifference curvelike many aspects of contemporary economics indifference curves have been criticized for oversimplifying or making unrealistic assumptions about human behavior 2consumer preferences might change between two points in time rendering specific indifference curves practically useless other critics note that it s theoretically possible to have concave indifference curves or even circular curves that are either convex or concave to the origin at various points 