Answer to Question #166486 in Microeconomics for Peter

Question

Explain any four uses of indifference curves analysis

Answer 1

i) The indifferent curve analysis is used in measuring the cost of living or standard of living in terms of index numbers.

ii) The indifference curve analysis can be used to measure the effects of government subsidy on low income groups.

iii) Indifference curve analysis have been used to explain the concept of consumer’s surplus, substitutability and complementarity of goods.

iv) The indifference curve analysis has also been used to explain producer's equilibrium.