#cfa #cfa-level-1 #economics #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #section-3-utility-theory #study-session-4
To represent our consumer’s preferences graphically, not just mathematically, we have the concept of an
indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them.
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3. UTILITY THEORY: MODELING PREFERENCES AND TASTESweaker measures than cardinal rankings because they do not allow the calculation and ranking of the differences between bundles.
3.3. Indifference Curves: The Graphical Portrayal of the Utility Function
<span>It will be convenient for us to represent our consumer’s preferences graphically, not just mathematically. To that end, we introduce the concept of an indifference curve , which represents all the combinations of two goods such that the consumer is entirely indifferent among them. This is how we construct such a curve: Consider bundles that contain only two goods so that we can use a two-dimensional graph to represent them—as in Exhibit 1, where a particular bund Summary
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