An indifference curve represents a graph showing different combinations of two goods that provide the same level of utility or satisfaction to a consumer. Each point on the curve indicates a combination of the two goods where the consumer feels equally satisfied, thereby being indifferent to the choice between them. The shape of the curve typically reflects the principle of diminishing marginal rate of substitution, meaning that as a consumer substitutes one good for another, the amount of the second good needed to maintain the same level of satisfaction decreases.
Indifference curves never cross, as this would imply inconsistent preferences. Furthermore, curves that are further from the origin represent higher levels of utility. In mathematical terms, if and are two goods, an indifference curve can be represented as , where is a constant representing the utility level.
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