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Economic Theory

3. The price that a consumer pays for a commodity indicates the level
of utility derived by him.
4. His income remains constant.
5. His tastes, preference, habits remain unchanged.

An indifference schedule is a statement of various combinations of
two commodities that will equally be accepted by the consumer. The

various combinations give equal satisfaction to the consumer. Therefore he
is indifferent between various combinations. Let us assume that the
consumer buys two commodities – bananas and biscuits.

Table 6.1 – Indifference Schedule

Combination Biscuits (Good X) Bananas (Good Y)

A 1 12
B 2 8
C 3 5
D 4 3
E 5 2

From the above schedule it can be understood that while the number

of biscuits is increasing, the number of bananas is decreasing so that the
level of satisfaction is the same for all the combinations. Therefore the
consumer is indifferent between the combinations A, B, C, D and E.

The data in the indifference schedule can be represented in the graph
with one commodity on the X-axis and another commodity in the Y-axis
The various combinations of the two commodities are plotted and joined to
form a curve called indifference curve. In the figure IC is an indifference

curve showing combinations of the two commodities given in the
schedule.

Figure 6.1 – Indifference curve

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