Indifferenssikäyriä

Indifferenssikäyriä, often translated as indifference curves, are a graphical representation used in microeconomics, particularly in consumer theory, to illustrate the preferences of a consumer between two goods. Each point on an indifference curve represents a combination of two goods that provides the consumer with the same level of utility or satisfaction.

The key characteristic of indifference curves is that a consumer is indifferent as to which bundle of goods on a single curve they consume. If a consumer moves to a higher indifference curve, they are better off, as this signifies a higher level of utility. Conversely, moving to a lower indifference curve means they are worse off.

Indifference curves are typically depicted as downward sloping and convex to the origin. The downward slope indicates that to maintain the same level of satisfaction, if a consumer consumes less of one good, they must consume more of the other. The convexity arises from the principle of diminishing marginal rate of substitution, meaning that as a consumer acquires more of one good, they are willing to give up progressively less of the other good to obtain an additional unit.

Indifference curves cannot intersect each other. If they did, it would imply a contradiction in the consumer's preferences, violating the assumption of transitivity. For example, if curve A intersected curve B, a point on A could be considered equivalent to a point on B, and a point on B equivalent to a point on C. This would imply the point on A is equivalent to the point on C, but the relative positions of A and C on the graph would suggest otherwise.