- Indifference Curves are dense in commodity space, i.e., every combination of X and Y is on
an Indifference Curve.
- By the principles of Non-Satiation and Transitivity, all combinations above Indifference
Curves are preferred to points on the Indifference curve and all combinations on
Indifference Curves are preferred to combinations below the Indifference Curve.
- Since Indifference Curves are derived from ordinal utility, i.e., preference ranking of
combinations rather than actual measurement of levels of utility, there is no cardinal
measurement (assignment of a particular number) of comparative preferences. We can say
that combinations above (for example) an indifference curve are preferred to combinations
on the indifference curve but we cannot measure the amount of the preference.
Consumer Equilibrium (Optimal Preference or Maximum Utility)
- Since we assume that Consumers’ attempt to maximize their preference (utility), Consumer
Equilibrium implies that the consumer’s