indifference curve

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Indifference curve

The expression in a graph of a utility function, where the horizontal axis measures risk and the vertical axis measures expected return. The curve connects all portfolios with the same utility.

Indifference Curve

A curve on a graph where the x-axis represents a quantity of one good and the y-axis represents a quantity of a second good where the curve represents the universe of quantities with the same utility for a rational investor. The indifference curve is convex, or roughly U-shaped.
Indifference curveclick for a larger image
Fig. 91 Indifference curve. A combination of OA units of product X, and OB units of product Y, yields exactly as much satisfaction to the consumer as does the combination of OC units of product X and OD units of product Y.

Indifference curves always slope downwards because, rationally, consumers will always prefer more of both products and so would not be indifferent between two combinations of products where one combination offers more of both. Specifically, they would only give up one product if they receive more of another for it, being indifferent as between combination E, which offers a lot of product X and little of product Y, and combination F which offers less product X and more product Y (see ECONOMIC MAN).

indifference curve

a curve showing alternative combinations of two products, each of which gives the same UTILITY, or satisfaction. See Fig. 91 . Indifference curves are used (along with BUDGET LINES) to determine a consumer's equilibrium purchases of two products and to analyse the effect of changes in the relative prices of these two products upon quantities demanded (see PRICE EFFECT). See CONSUMER EQUILIBRIUM, INDIFFERENCE MAP.
References in periodicals archive ?
Based on this input, our utility curve looks like the Days in the Shop graph in the Reliability section of Figure 3.
Next, look up the utility value of "Number of Days in the Shop" for Car A from the utility curve (86).
Let's take the utility curve of the average delay as an example.
Based on these five sets of values, we can further estimate the utility curve of the average delay and use statistical software to obtain a utility function that approximates the curve.
All parties involved with the utility curve will be glad you did.
A mathematician might draw a utility curve to find the point at which it no longer makes sense to shell out for a service; everyone else just goes on their gut feeling.
In fact, in comparing the marginal-utility curves of Tom, Dick, and Harry Class, there are any number of reasons why Harry's marginal utility curve might decline less steeply than Tom's and Dick's.
When there is a proportional cost, the customer's utility curve is tangent to the more shallow budget line at a point [[beta].
The techniques deployed include the use of Discrete Choice Modeling, an approach that attempts to reflect the real-world trade offs and actual preferences of respondents, and enables the establishment of factor utility curves that capture how changes in corporate performance on key issues affects respondent perspectives.
As opposed to Kahneman and Tversky (1979), who maintain that those marginal utility curves are concave for income increases and convex for income decreases, Vendrik and Woltjer find that they are concave for both increases and decreases in income, reflecting accelerating loss aversion.
As you know, utility curves are what economists use to estimate the well-being of individuals, companies and other organizations.
The curious results in demand analysis should be reflected in the utility curves that support demand theory.

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