Q.
What do you understand by an "indifferent curve". Illustrate your point with a diagram.
A.
An indifference curve is a graph showing different bundles of goods between which a consumer is indifferent. That is, at each point on the curve, the consumer has no preference for one bundle over another. One can equivalently refer to each point on the indifference curve as rendering the same level of utility (satisfaction) for the consumer. In other words an indifference curve is the locus of various points showing different combinations of two goods providing equal utility to the consumer.
For example, Good Y is 250ml mineral water, and Good X is 500ml mineral water of the same brand and you do not have any preference over them. For every two Y, you do not mind getting one X. But, due to reluctance of keeping track, you sometimes keep more of Y before you think you would want to keep some X. And to save the trouble of keeping them accurately in ratio of 2Y : 1X, you only periodically exchange 2Y with 1X. In a real life scenario, imagine there are 50% of customers preferring each packing, so as a shopkeeper, you keep both packing without having preference to keep more of any particular packing.
It is curved because only when you realized that you are keeping too many of one packing you would prefer to exchange for more of the other packing. Let say, suddenly you realized that you are keeping too many Y, and almost none of X, you would not mind to exchange three Y with 1 X. And, same for the case that you suddenly realized that you stocked too many X, that you would not mind to give away 1X in exchange for 1Y.
Perfect Substitute.
Like a generic Panadol A in exchange for anther brand of generic Panadol B.
Perfect Complement.
Like Right Slipper in pair with Left Slipper. When the right is matched with the left, the surplus is not material.
