PHYSICS 102 Lecture Notes - Lecture 27: Budget Constraint, Partial Derivative, Indifference Curve
Document Summary
Indifference curves are a set of bundles that have indifferent preference for consumption: the graph below shows why indifference curves cannot cross. On this example they cross at bundle x. Preference wise bundle x is equal to both z and y. By the law of transitivity that means z = y, and as seen on the graph y is above z in priority, explaining why the curves cant cross. Utility function: an assignment of numbers to bundles, can represent preferences. Utility function and indifference curve: below graphs show bundles (4,1) (2,2) (2,3) and utilities u(4,1)=u(2,2)=4
