All bundles of goods X and Y (such as bundles K, B, C) that lie on IC0 give equal satisfaction to a consumer and are equally preferable. But any bundle such as G which lies in space above the indifference curve IC0is superior or preferable to any bundle on IC0. We can then visualize a number of bundles in this space above IC0 which give the consumer same satisfaction on G such as H, Q and draw an indifference curve by joining HG and Q and name this as IC1. The IC1curve lies above IC0 and hence all bundles on this curve are more satisfying and preferable to all bundles on the lower curve IC0. We can similarly visualizes a large number of combinations of X and Y which give more satisfaction than the combination on a lower curve and draw a large number of indifference curves.
A comparison between successive points such as B G R S (where each higher point shows combinations that contain more of both X and Y) thus shows that farther away an indifference curve is from the origin, the higher is the level of satisfaction given by bundles that are located on it. Thus, we can say that a higher indifference curve confers a higher level of satisfaction.
A set of indifference curve is called an indifference map. In this map, the further and father a curve lies from the origin, the higher is the satisfaction that it represents. Thus a higher curve is preferable to a lower curve and every consumer, within the constraint of limited income, would like to move to the highest possible curve.SUBMIT ASSIGNMENT NOW!