Question

discuss how the idea of rationality is used in the indifference curve theory consumer behaviour

Answer 1

Rationality of consumer is making choices based on preferences. Here a consumer is rational if he always chooses the feasible alternative that he most prefers. The choice of an alternative that is not the best is called irrotational. An indifference curve shows a combination of two goods that give a consumer equal satisfaction and utility therefore making a consumer indifferent. So a consumer is assumed to be rational when he aims at maximizing his utility given his income and market prices.