Skip to main content

Differentiate between indifference curve and Budget line.


Differentiate between indifference curve and Budget line is given below:

An indifference curve is a combination of two goods that give the consumer equal satisfaction and utility.
A budget line is a line showing the alternative combinations of any two goods that a consumer can afford at given prices for the goods within given level of income.
All points give the same utility in indifference curve to satisfy consumer. 
Combinations of two selected products that a consumer can afford at specified prices for the products according to their particular income level.
The main use of indifference curves is in the representation of potentially observable demand patterns for individual consumers over commodity.
In budget line Total spending for goods and services can fall short of the budget constraint but may not exceed it. 

Discuss different properties of Indifference curve.
Indifference curves slope downward to the right: This property implies that an indifference curve has a negative slope.
Indifference curves are convex to the origin: The indifference curve is relatively flatter in its right-hand portion and relatively steeper in its left-hand portion.
Indifference curves cannot intersect each other: important property of indifference curves is that they cannot intersect each other.
A higher indifference curve represents a higher level of satisfaction than a lower indifference curve: In other words, the combinations which lie on a higher indifference curve will be preferred to the combinations which lie on a lower indifference curve.

Labels

Labels:

Comments

Post a Comment

Popular posts from this blog

Difference between Downsizing and Reengineering with real life example

Explain difference between Downsizing and Re-engineering with real life example? Downsizing = Downsizing is used to reduce the size in order to improve its financial performance, usually by laying off employees.Businesses use several techniques in downsizing, including providing incentives to take early retirement and transfer to subsidiary companies, but the most common technique is to simply terminate the employment of a certain number of people. Downsizing often takes place as part of a larger restructuring program at a company. Although it's usually thought of as a strategy companies use to become smaller, downsizing can also be the result of company mergers, acquisitions, and takeovers.Its most common form comes in employee layoffs, which reduce payroll costs for the company. Downsizing may also involve shuttering some operations or offering certain employees early retirement. Downsizing is typically seen during economic downturns in order to improve efficienc...
5 comments
Read more

What are the Crosby’s 14 Steps Work.

The 14 Steps of Crosby are following. 1. Management Commitment= It is necessary to consistently produce quality products and services at the optimum price. This commitment must also be transparent to all employees for the prevention of defects in all the operating departments. 2. Improved Quality= Search for team members who will model quality improvement commitment, every function of an operation must contributes to defect levels, every function must participate in the quality improvement effort . The quality improvement team should be able to effectively commit themselves to improvement of quality. 3. Measuring the Quality= Firstly you have to know exactly where your products and services lie when it comes to conforming to requirements. Thus, the third step on Crosby's list is to measure quality. Determine where there is room for improvement and where potential for improvement exists. 4. Cost of Quality= Explain how the cost of quality figures into the overal...
1 comment
Read more

Discuss national income and Gross domestic product effect on national income.

Discuss national income and Gross domestic product effect on national income. Before we start to explain let’s take a look on closed and open economy In a closed economy, all output is sold domestically, and expenditure is divided into three components: consumption, investment, and government purchases. Y = C + I + G In this equation Y is the total output, C is the total consumption, I is the total investment and G is the total government expenditure. In an open economy, some output is sold domestically and some are exported abroad.                                                                   Y = C + I + G + NX In the above equation each word stands for is following: Consumption (C) Investment (I) Government Purchases (G) Net Exports (NX) Consumption : The spending by households on goods and services, with the exc...
Post a Comment
Read more