Estimation of Soil Suction From the Soil-water Characteristic Curve1
Indifference curve1
-
Upload
amit-kumar -
Category
Education
-
view
252 -
download
0
description
Transcript of Indifference curve1
INDIFFERENCE CURVES
INDIFFERENCE SCHEDULE
Combination x YA 1 22
B 2 14
C 3 10
D 4 8
E 5 7
1210 8 6 4 2 0
1 2 3 4 5
A(1, 22)
B(2,14)
C(3, 10)
24 22 20 18 16 14
D(4, 8)
E(5, 7)
IC1
X
Y
Y X
Y
X
PROPERTIES OF IC
5. Indifference curve touches neither X-axis nor Y-axis.
6. Indifference curve need not to be parallel to each other .
1210 8 6 4 2 0
1 2 3 4 5
XY IC1
A(0, 10)X
BUDGET CONSTRAINTS
• Budget Constraints limits an individual’s ability to consume in light of the prices they must pay for various goods and services.
• Budget Line or Price Line: Show all possible combination of two goods that the consumer can buy if he spends the whole of his given sum of money at his purchases at the given prices.
BUDGET LINE
Combination
Apples(@ Rs. 6 per unit)
Oranges @ Rs. 2 Per unit
Total budget(Rs.)=6xA+2xO
A 0 12 24
B 1 9 24
C 2 6 24
D 3 3 24
E 4 0 24 Budget line corresponding to budget of Rs. 24
Unattainable
Attainab
le
Y
X
CONDITIONS OF CONSUMER EQUILIBRIUMY
X
12
10
8
6
4
2
01 2 3 4 5 6
(Attainable)
(Unattainable)
IC1
IC2
IC3
IC4
C
A
B
Condition-1: Budget Line should be Tangent to the
Indifference Curve.
CONDITIONS OF CONSUMER EQUILIBRIUM
Condition-2: Indifference Curve must be convex to the origin.
1210 8 6 4 2 0
1 2 3 4 5
16 14
X
Y
IC1 E
Budget Line
Combination E can not be equilibrium point Because MRS will be increasing at E whereas it should be diminishing at the equilibrium point. A
B
SHIFT IN THE BUDGET LINE
If budget (Income) of the consumer reduces to , then budget line will shift inward to L3
If budget (Income) of the consumer increases to , then budget line will shift outward to L2
1210 8 6 4 2 0
1 2 3 4 5 6
181614
X
Y
L2
L3
L1
p
Thank You