A Business Encyclopedia

Indifference Map

Definition: The Indifference Map is the graphical representation of two or more indifference curves showing the several combinations of different quantities of commodities, which consumer consumes, given his income and the market price of goods and services.

The consumer preferences give rise to several combinations of commodities, each yielding the same level of satisfaction. Hence, it is critical to understand the preferences of the consumer as these vary from individual to individual and market to market. The concept of the indifference map can be further understood through a figure given below:

indifference map

The space between axis X and Y is called as the Indifference Plane or Commodity Space. This plane is comprised of finite points, each point representing the different combinations of goods X and Y. It is possible to identify two or more points on the indifference plane, which shows different combinations of good X and Y, yielding the same level of utility.

Thus, it is always possible to draw a number of indifference curves without intersecting or being tangent to each other. These indifference curves Viz. IC1, IC2, IC3, IC4, drawn graphically represents the indifference map. Thus, an indifference map may contain several IC curves positioned on the basis of the consumer’s preferences.

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