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As a consequence, every budget line for a given budget and any two products is tangent to the same indifference curve and this means that every budget line is tangent to, at most, one indifference curve (and so every consumer makes the same choices). There are infinitely many indifference curves: one passes through each combination.
The blue curves in the diagram represent indifference curves for Octavio, and are shown as convex from his viewpoint (i.e. seen from the bottom left). The orange curves apply to Abby, and are convex as seen from the top right.
The lemma states that if indifference curves of the expenditure or cost function are convex, then the cost-minimizing point of a given good with price is unique. The idea is that a consumer will buy a unique ideal amount of each item to minimize the price for obtaining a certain level of utility given the price of goods in the market .
Under the standard assumption of neoclassical economics that goods and services are continuously divisible, the marginal rates of substitution will be the same regardless of the direction of exchange, and will correspond to the slope of an indifference curve (more precisely, to the slope multiplied by −1) passing through the consumption bundle in question, at that point: mathematically, it ...
For example, every point on the indifference curve I1 (as shown in the figure above), which represents a unique combination of good X and good Y, will give the consumer the same utility. Indifference curves have a few assumptions that explain their nature. Firstly, indifference curves are typically convex to the origin of the graph.
The set of all these efficient points that could be traded to is the contract curve. In the graph below, the initial endowments of the two people are at point X, on Kelvin's indifference curve K 1 and Jane's indifference curve J 1. From there they could agree to a mutually beneficial trade to anywhere in the lens formed by these indifference ...
Price-consumption curves are used to connect concepts of utility, indifference curves, and budget lines to supply-demand models. [1] At each price there is a single corresponding quantity of either good. Due to this, by modeling the good with the changing price as any particular good and the good with the unchanging price as all other goods ...
Indifference map with two budget lines (red) depending on the price of Giffen good x. In microeconomics and consumer theory, a Giffen good is a product that people consume more of as the price rises and vice versa, violating the law of demand.