Changes

Let's take a simple example.  Suppose you like chocolate and peanut butter equally well, and you are "indifferent" between receiving one chocolate bar and one peanut butter candy bar.  Plotting the good for a chocolate bar on the x-axis and the good for a peanut butter candy bar on the y-axis, the indifference curve will be a straight line with a negative slope of 1.  Give up a chocolate bar but receive a peanut butter bar, and you're on the same indifference curve:  your overall utility has not changed.  But give up a chocolate bar and receive TWO peanut butter bars, and you've increased your overall utility and you've left that original indifference curve.  You're better off with that deal and are not "indifferent" to it.  You want the improvement in utility in the 2-for-1 deal.

Let's take a simple example.  Suppose you like chocolate and peanut butter equally well, and you are "indifferent" between receiving one chocolate bar and one peanut butter candy bar.  Plotting the good for a chocolate bar on the x-axis and the good for a peanut butter candy bar on the y-axis, the indifference curve will be a straight line with a negative slope of 1.  Give up a chocolate bar but receive a peanut butter bar, and you're on the same indifference curve:  your overall utility has not changed.  But give up a chocolate bar and receive TWO peanut butter bars, and you've increased your overall utility and you've left that original indifference curve.  You're better off with that deal and are not "indifferent" to it.  You want the improvement in utility in the 2-for-1 deal.

Let’s take another example that illustrates the usefulness of an indifference curve.  Suppose you are working on the homework for this course with three friends - Chris, Stephanie and Kevin.  Someone says they are hungry and go to look for snacks.  You see a half-eaten bag of potato chips and you pop a bag of popcorn.  However, there is not enough food for everyone, so have to ration who receives what.

Let’s take another example that illustrates the usefulness of an indifference curve.  Suppose you are working on the homework for this course with three friends - Chris, Stephanie and Kevin.  Someone says they are hungry and go to look for snacks.  You see a half-eaten bag of potato chips and you pop a bag of popcorn.  However, there is not enough food for everyone, so you have to ration who receives what.

You count 24 potato chips and 40 kernels of popcorn.  Uh oh.  There are four of you.  On average, that’s only 6 potato chips and 10 kernels of popcorn per person.  You tell everyone that.

You count 24 potato chips and 40 kernels of popcorn.  Uh oh.  There are four of you.  On average, that’s only 6 potato chips and 10 kernels of popcorn per person.  You tell everyone that.