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Consider the function Y = pXZ where X greater than 0 and Z greater than 0. Draw the contour lines...

Question:

Consider the function {eq}Y = pXZ {/eq} where {eq}X > 0 {/eq} and {eq}Z > 0 {/eq}. Draw the contour lines (in the positive quadrant) for this function for {eq}Y = 4, Y = 5, {/eq} and {eq}Y = 10 {/eq}. What do we call the shape of these contour lines? Where does the line {eq}20X + 10Z = 200 {/eq} intersect with the contour line {eq}Y = 50 {/eq}?

Indifference Curves:

Indifference curve is a type of level curves in economics. All consumption bundles on an indifference curve yields the same level of total utility, hence consumers are indifferent between those consumption bundles.

Answer and Explanation: 1

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These contour lines are plotted below (with p = 1):

These contour lines are convex.

For the case of p = 1, the point of intersection is the...

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Indifference Curves: Use & Impact in Economics

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Chapter 3 / Lesson 12
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In economics, indifference curves show which goods in the marketplace bring equal satisfaction to consumers, leaving them indifferent to which goods they purchase. Explore the definition, learn about their use and impact in economics, and review how they work.


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