Question

Define an indifference map. Why does indifference curve to the right show more utility? Explain. 

Explain why an indifference curve to the right shows higher utility.

Answer 1

An indifference map is a family or collection of indifference curves that depict a consumer's different levels of satisfaction and preferences. Each indifference curve in an indifference map depicts a particular level of satisfaction.

The rightmost indifference curve represents the highest utility derived from jointly consuming two goods. The highest utility implies that the consumer is able to fetch the maximum possible satisfaction level as he is able to consume more of both the goods. That is, the farther the IC is from the origin, the higher the level of utility for the consumer. 

The above figure depicts an Indifference Map comprising of six indifference curves (from IC₁ to IC₆). As the consumer moves farther away from IC₁ to higher indifference curves the level of satisfaction derived by the consumer increases. For example, on IC₂, the consumer is consuming 5 units of good 1 and 2 units of good 2 . As compared to this on the higher indifference curve, IC₆, the consumer is able to consume 8 units of good 1 and 5 units of good 2. Thus, IC₆ represents higher utility than IC₂.