Economics, 3rd Edition

The Consumer’s Preferences

The consumer’s preferences are represented with indifference 

curves, which show the combinations of cola and pizza that make the 

consumer equally satisfied. Because of the assumption that more is 

preferred to less, points on a higher indifference curve (I

2

 here) are 

preferred to points on a lower indifference curve (I

1

). A point along an 

indifference curve such as point B on indifference curve I

1

, represents 

a bundle or combination of goods, cola and pizza in this case. The 

consumer is indifferent between any point along an indifference 

curve such as A, B or C along indifference curve I

1

. Points D and E on 

indifference curve I

2

 also represent combinations of goods between 

which the consumer is indifferent but any point on indifference curve I

2

 

is preferred to any point on indifference curve I

1

.