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Indifference curve Analysis and Budget constraint - Economics Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

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FAQs on Indifference curve Analysis and Budget constraint - Economics Video Lecture - SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

1. What is indifference curve analysis in economics?
Ans. Indifference curve analysis is a graphical tool used in economics to represent an individual's preferences for different combinations of goods or services. It shows the various combinations of two goods that provide the same level of satisfaction or utility to the individual.
2. How are indifference curves used in consumer theory?
Ans. Indifference curves are used in consumer theory to analyze how individuals make choices in the face of limited resources and a budget constraint. By comparing different indifference curves, economists can determine the optimal combination of goods that maximizes an individual's satisfaction or utility.
3. What is a budget constraint in economics?
Ans. A budget constraint in economics represents the limited amount of income or resources available to an individual or a household. It shows the different combinations of goods and services that can be purchased with the given income or budget.
4. How do indifference curves and budget constraints intersect?
Ans. Indifference curves and budget constraints intersect at the point of consumer equilibrium. This point represents the combination of goods that maximizes an individual's satisfaction or utility, given their budget constraint. The indifference curve is tangent to the budget constraint at this point.
5. What does the slope of an indifference curve represent?
Ans. The slope of an indifference curve represents the rate at which an individual is willing to substitute one good for another while maintaining the same level of satisfaction or utility. It is also known as the marginal rate of substitution (MRS). The slope becomes steeper as the individual is willing to give up more of one good for a small increase in the other good.
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