examine how indifference curves assissts in the understanding of pareto efficiency

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Ans: An indifference curve is a graph showing the locus of two goods that give the consumer equal satisfaction and utility. Each point on an indifference curve indicates that a consumer is indifferent between the two and all points give him the same utility.

Now the Pareto efficiency curve is the combination of all efficient points projected as the contract curve are the points of tangency between two different individuals indifference curve. so, on the contract curve, the marginal rate of substitution is the same for both people.

for example, if an economy is having one good and all will be satisfied with that. Now if we will give more to one person then he will be satisfied but the other person who's portion been taken got worse off. so the Pareto efficiency curve is the combination of satisfaction curve or indifference curve of two people who tries to maximize their satisfaction on the locus of the contract curve.

Rahul Sunny answered 9 months ago

indifference curves

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