AP_Krugman_Textbook

the same total utility—450 utils—as A.We say that Ingrid is indifferentbetween Aand B:
because bundles Aand Byield the same total utility level, Ingrid is equally well off with
either bundle.
A contour line that maps consumption bundles yielding the same amount of total
utility is known as an indifference curve.An individual is always indifferent between
any two bundles that lie on the same indifference curve. For a given consumer, there is
an indifference curve corresponding to each possible level of total utility. For example,
the indifference curve in Figure 80.2 shows consumption bundles that yield Ingrid 450
utils; different indifference curves would show consumption bundles that yield Ingrid
400 utils, 500 utils, and so on.
A collection of indifference curves that represents a given consumer’s entire utility
function, with each indifference curve corresponding to a different level of total util-
ity, is known as an indifference curve map.Figure 80.3 shows three indifference
curves—I 1 , I 2 , andI 3 —from Ingrid’s indifference curve map, as well as several con-
sumption bundles, A, B, C,and D.The accompanying table lists each bundle, its com-
position of rooms and restaurant meals, and the total utility it yields. Because
bundles Aand B generate the same number of utils, 450, they lie on the same indif-
ference curve, I 2.
Although Ingrid is indifferent between Aand B,she is certainly not indifferent be-
tween Aand C:as you can see from the table, Cgenerates only 391 utils, a lower total
utility than Aor B.So Ingrid prefers consumption bundles Aand Bto bundle C.This is
represented by the fact that Cis on indifference curve I 1 , and I 1 lies below I 2. Bundle D,
though, generates 519 utils, a higher total utility than Aand B.It is on I 3 , an indiffer-
ence curve that lies above I 2. Clearly, Ingrid prefers Dto either Aor B.And, even more
strongly, she prefers Dto C.

module 80 Appendix 789

Section 14 Appendix

A

B

C

D

Consumption

bundle

3

6

5

4

Quantity

of rooms

30

15

10

45

Quantity

of meals

450

450

391

519

Total

utility

(utils)

A

D

B

C

021357910468

90

80

70

60

45

30

15

10

Quantity of rooms

Quantity of

restaurant

meals

I 2

I 3

I 1

391 utils

450 utils

519 utils

An indifference curveis a line that

shows all the consumption bundles that

yield the same amount of total utility for

an individual.

The entire utility function of an individual

can be represented by an indifference

curve map,a collection of indifference

curves in which each curve corresponds

to a different total utility level.

The utility function can be represented in greater detail by in-

creasing the number of indifference curves drawn, each cor-

responding to a different level of total utility. In this figure

bundle Clies on an indifference curve corresponding to a

total utility of 391 utils. As in Figure 80.2, bundles Aand Blie

on an indifference curve corresponding to a total utility of

450 utils. Bundle Dlies on an indifference curve correspon-

ding to a total utility of 519 utils. Ingrid prefers any bundle on

I 2 to any bundle on I 1 , and she prefers any bundle on I 3 to

any bundle on I 2.

figure 80.3 An Indifference Curve Map