assumption that many students and economists find uncomfortably unrealistic—the indifference curve

framework helps to clarify the logic of the underlying model.

What Is an Indifference Curve?

People cannot really put a numerical value on their level of satisfaction. However, they can, and do, identify

what choices would give them more, or less, or the same amount of satisfaction. An indifference curve shows
combinations of goods that provide an equal level of utility or satisfaction. For example, Figure B1 presents

three indifference curves that represent Lilly’s preferences for the tradeoffs that she faces in her two main

relaxation activities: eating doughnuts and reading paperback books. Each indifference curve (Ul, Um, and Uh)

represents one level of utility. First we will explore the meaning of one particular indifference curve and then

we will look at the indifference curves as a group.
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