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Examples of Indifference Curves

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  1. Examples of Indifference Curves Lectures in Microeconomics-Charles W. Upton

  2. Three Examples • We are going to do some special cases to illustrate how some special indifference curves look. Examples of Indifference Curves

  3. Coke® or Pepsi® • I don’t care whether you have Coke® or Pepsi®, as long as it is cola. Examples of Indifference Curves

  4. Coke® or Pepsi® • I don’t care whether you have Coke® or Pepsi®, as long as it is cola. • This is a case we discussed earlier: perfect substitutes. Examples of Indifference Curves

  5. Coke and Pepsi Coke 4 5 7 3 8 2 \ 6 1 Pepsi Examples of Indifference Curves

  6. Coke and Pepsi Coke 4 5 7 3 8 2 \ 6 1 Pepsi Examples of Indifference Curves

  7. Coke and Pepsi Coke 4 5 7 3 I1 8 2 \ 6 1 Pepsi Examples of Indifference Curves

  8. Coke and Pepsi Coke 4 I2 5 7 3 I1 8 2 \ 6 1 Pepsi Examples of Indifference Curves

  9. Coke and Pepsi Coke I3 4 I2 5 7 3 I1 8 2 \ 6 1 Pepsi Examples of Indifference Curves

  10. Left and Right Shoes • Perfect Complements Examples of Indifference Curves

  11. Left and Right Shoes Right Shoes 4 5 7 3 8 2 \ 6 1 Left Shoes Examples of Indifference Curves

  12. Left and Right Shoes Right Shoes 4 5 7 3 8 2 \ 6 I1 1 Left Shoes Examples of Indifference Curves

  13. Left and Right Shoes Right Shoes 4 5 7 3 8 I2 2 \ 6 I1 1 Left Shoes Examples of Indifference Curves

  14. Left and Right Shoes Right Shoes 4 5 7 3 I3 8 I2 2 \ 6 I1 1 Left Shoes Examples of Indifference Curves

  15. Third Example • Indifference curves between Bourbon and Temperance Lectures for W.C. Fields and Carrie Nation. Examples of Indifference Curves

  16. Third Example • Indifference curves between Bourbon and Temperance Lectures for W.C. Fields and Carrie Nation. • W. C. Fields was a movie actor with a legendary drinking problem. Examples of Indifference Curves

  17. Third Example • Indifference curves between Bourbon and Temperance Lectures for W.C. Fields and Carrie Nation. • W. C. Fields was a movie actor with a legendary drinking problem. • Carrie Nation was a prominent leader in the temperance movement. Examples of Indifference Curves

  18. W. C. Fields Bourbon 4 5 I4 7 3 I3 8 I2 2 \ I1 Temperance Lectures 6 1 Examples of Indifference Curves

  19. Carrie Nation Bourbon I1 I2 I3 I4 4 5 7 3 8 2 Temperance Lectures \ 6 1 Examples of Indifference Curves

  20. Apples and Bananas • I like apples and bananas. If you cut the number of apples in half and double the number of bananas, I am just as well off. Examples of Indifference Curves

  21. Apples and Bananas • I like apples and bananas. If you cut the number of apples in half and double the number of bananas, I am just as well off. • This is a more standard case. Examples of Indifference Curves

  22. Apples and Bananas • I like apples and bananas. If you cut the number of apples in half and double the number of bananas, I am just as well off. • This is a more standard case. • It actually corresponds to U(A, B) = AB Examples of Indifference Curves

  23. Apples and Bananas • I like apples and bananas. If you cut the number of apples in half and double the number of bananas, I am just as well off. • This is a more standard case. • It actually corresponds to U(A, B) = AB • To see this, note that (0.5A)(2B) = AB. Examples of Indifference Curves

  24. Apples and Bananas A 4 5 7 3 8 2 \ 6 1 I1 B Examples of Indifference Curves

  25. Apples and Bananas A 4 5 7 3 8 2 \ I2 6 1 I1 B Examples of Indifference Curves

  26. Apples and Bananas A 4 5 7 3 I3 8 2 \ I2 6 1 I1 B Examples of Indifference Curves

  27. More to Come • Done • The Basic Model of Utility Maximization • Some Applications to Indifference Curve • We continue this topic in the next lecture. Examples of Indifference Curves

  28. End ©2004 Charles W. Upton Examples of Indifference Curves