When combination of two goods which a consumer derive equal satisfaction is plotted on a graph, the graph is known as

Step 1: Analyze the question The question asks for the name of the graph formed when you plot different combinations of two goods that give a consumer the same level of satisfaction.

Step 2: Explain the concept In consumer theory (ordinal utility approach), a consumer may be equally happy with different bundles of two goods. For example, 4 loaves of bread and 2 tins of milk might satisfy a consumer just as much as 2 loaves of bread and 4 tins of milk. When all such bundles are plotted, with one good on each axis, and joined together, the result is a downward-sloping curve that is convex to the origin. This is the indifference curve, because the consumer is "indifferent" between any two points on it.

Step 3: Check each option

• A. Opportunity curve: This shows the combinations of goods a consumer can afford with a given income (budget line), or the production possibilities of an economy. It is about limits and cost, not equal satisfaction.
• B. Utility curve: This is a vague term. Utility is usually shown as total or marginal utility against quantity of a single good, not combinations of two goods.
• C. Demand curve: This shows the relationship between the price of a good and the quantity demanded.
• D. Indifference curve: This shows the combinations of two goods that give equal satisfaction. ✔

Step 4: Answer The correct option is D. indifference curve.

Exam tip: Remember the key phrase "equal satisfaction = indifference". Also remember the properties of indifference curves: they slope downward, are convex to the origin, and never intersect. A higher curve means a higher level of satisfaction.