ANALYSIS OF

CONSUMER BEHAVIOUR
ORDINAL UTILITY
APPROACH
BY INDIFFERENCE CURVE

INDIFFERENCE CURVE
It may be defined as the locus of
points each representing the
different combination of two
substitute goods, which yield the
same utility or level of
satisfaction to the consumer
Also known as the ISO utility
curve or equal utility curve
It depend on consumer choice &
preference

consum
er
A
B
C
D
E

x
25
15
8
4
2

y
3
5
9
17
30

utility
U
U
U
U
U

FOUR BASIC PROPERTIES

NEGATIVELY
SLOPED

CONVEX TO
THE ORIGIN

NON INTER.
&
NON TANGIN.

UPPER CURVE
SHOWS
HIGHER LEVEL
OF
SATISFACTION

DEMAND FUNCTION
Demand for the commodity
arises from the consumer
willingness & ability to
purchase the commdity
Quantity demanded of a
commodity is not only the
function of PRICE
BUT also income, price of
related goods ,taste of

Dx =f[Px,Py,Pz,B,A,E,T,U]

Dx= demand for item X

PX = Price of item X
Py = price of substitute
Pz = price of complements
B = Income of consumer
E = Price expectation of the
user
T = Taste or preferrence of