Consider two utility functions, U(c1, c2) and V(c1, c2) that satisfy V(c1, c2) = 5U(c1, c2). Show that the indifference curve maps of U and V are identical. Suppose 5 is replaced by any positive number, is the result still true?
This curve shows the level of satisfaction individuals can enjoy by utilising 2 different commodities. All the points on this curve yield the same level of utility, so that person is indifferent to the particular combination he consumes.
Answer and Explanation: 1
An indifference map indicates all the indifference curves that rank consumers' preferences. A higher indifference curve yield a higher level of...
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fromChapter 3 / Lesson 12
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.