An indifference curve shows all the various combinations of two goods that give an equal amount of satisfaction or utility to a consumer.
Imagine that a supermarket is conducting a survey about the preferences of its customers. You are asked your views about various combinations of chocolate bars and sweet packets.
The important features of the indifference curves is that:
They are usually drawn convex to the origin
They are downward sloping
An indifference curve depicts a combination of two goods that provide the same level of satisfaction and utility to the consumer.
The consumer has an equal preference for the combinations of goods depicted along the curve—that is, he or she is indifferent with any combination of goods on the curve.
Indifference curves are typically convex to the origin, with no two curves ever intersecting.
The Indifference Curve: Criticisms and Complications
Indifference curves, like many aspects of contemporary economics, have been criticised for oversimplifying or making unrealistic assumptions about human behaviour.
Consumer preferences, for example, may fluctuate between two points in time, rendering precise indifference curves essentially irrelevant.