In which book by Prof Edgeworth describes the concept of indifference curve?
In which book by Prof Edgeworth describes the concept of indifference curve?
Edgeworth’s conjecture Incidentally, it was in this 1881 book that Edgeworth introduced into economics the generalised utility function, U(x, y, z.), and drew the first ‘indifference curve’.
What does the contract curve indicate in Edgeworth box diagram?
In an Edgeworth box the contract curve is the set of tangency points between the indifference curves of the two consumers. It is termed the contract curve since the outcome of negotiation about trade between two consumers should result in an agreement (a ‘contract’) that has an outcome on the contract curve.
What does it indicate when indifference curves intersect in an Edgeworth box?
When indifference curves intersect in an Edgeworth box, it indicates that: some goods are Giffen.
What does Edgeworth box depict?
In economics, an Edgeworth box, sometimes referred to as an Edgeworth-Bowley box, is a graphical representation of a market with just two commodities, X and Y, and two consumers. Points within the box represent ways of allocating the goods between the two consumers.
What is the other name of indifference curve?
The diagram shows an Indifference curve (IC). Any combination lying on this curve gives the same level of consumer satisfaction. Another name for it is Iso-Utility Curve.
What is indifference curve Class 11?
An indifference curve is a graphical representation of a combined products that gives similar kind of satisfaction to a consumer thereby making them indifferent. Every point on the indifference curve shows that an individual or a consumer is indifferent between the two products as it gives him the same kind of utility.
What are the types of indifference curve?
The four properties of indifference curves are: (1) indifference curves can never cross, (2) the farther out an indifference curve lies, the higher the utility it indicates, (3) indifference curves always slope downwards, and (4) indifference curves are convex.
Are the indifference curves of various individuals the same?
Each person determines his or her own preferences and utility. Thus, while indifference curves have the same general shape—they slope down, and the slope is steeper on the left and flatter on the right—the specific shape of indifference curves can be different for every person.
Why is indifference curve L shaped?
An L shaped indifference curve represents that two goods are perfect complements of each other.
What are the two types of ededgeworth diagram?
Edgeworth diagram is divided into two types. The horizontal side of the box measures a fixed total output of good 1 and the vertical side measures a fixed total output of good 2. Individual 1’s consumption of good 1 is measured horizontally from the origin at o 1. His/ her consumption of good 2 is vertical from o 1.
What are the assumptions of Edgeworth’s box diagram?
The Edgeworth box diagram assumed that there is non-satiation of consuming commodities. It means that it cannot be efficient to have total consumption of any good which is less than the output of the good.
How do you calculate the value of an edgeworth box?
Thus (X A ,Y A ) = wA and (X B , Y B ) = wB where w A and w B represents A’s and B’s initial endowments (or income). The height of the Edgeworth box represents the total amount of commodity ‘Y’ available and the width of the Edgeworth box represents the total amount of commodity ‘X’ available.
What is the Pareto set of an edgeworth box?
Pareto set (purple line) for an Edgeworth box Thus the Pareto set is the locus of points of tangency of the curves. This is a line connecting Octavio’s origin (O) to Abby’s (A). An example is shown in Fig. 6, where the purple line is the Pareto set corresponding to the indifference curves for the two consumers.