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Indifference Curve Analysis is also known as:

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 History of Indifference Curve Analysis
Edgewoth - 1881
Fisher - 1882
V. Pareto - 1906
W.E.Johnson - 1913
Slutsky - 1915
J.R.Hicks and R.G.Allen - 1934 ( ordinal approach of consumer's surplus)
§ Prof. Hicks gave explanation of this analysis in his book 'Value and Capital'
given in the year 1939.

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 The Basis of Indifference Curve Analysis
In cardinal approach, it is assumed that utility can be measured in the
terms of money which is not possible.
This is because utility is a psychological phenomenon that is it is based on
the mental makeup of the consumer and it differs from person to person.
And also the value of money is not constant and certain, it keeps on
changing.
In ordinal approach, only comparison is made among different utilities.
This approach suggests how to arrange various utility in a systematic way
and does not measure the utility. They only tell about the order and not
the difference.

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Indifference curve analysis is based on two facts:
1. First of all, priority sequence is determined such as first, second,
third etc.
2. Thereafter, different combination of goods is determined because
of limitation of income, so that with the help of priority sequence
the combination of maximum satisfaction can be chosen

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 Meaning of Indifference curve
An indifference curve explains those combinations of two goods which
provide equal satisfaction to the consumer. Since, all the combinations
present on the indifference curve provides equal satisfaction that is why,
consumer is indifferent regarding selecting these combinations or he
gives equal importance to all those combinations. This way, any point on
indiffernce curve is of equal importance for consumer. This is the reason
indifference curves are also called equal satisfaction curve or ISO utility
curve.
According to J.K Eastham, “It is the locus of the points representing pairs
of quantities between which individual is indifferent, so it is termed as
indifference curve.”

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 Indifference schedule
Indifference schedule is the
schedule showing those various
combinations of two commodities
which provides equal satisfaction
to consumer.

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 Indifference Curve
When various combinations of
indifference schedule are shown on
graph paper, the line arises out of
joining various combination points
is called indifference curve.

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 Indifference Map
When various indifference curves
depicting different levels of
satisfaction are shown in a single
diagram, it is called indifference
map.

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Following points should be considered regarding indifference map:
1. All points situated at any one indifference curve provides equal
satisfaction to consumer.
2. Satisfaction level of every indifference curve is different.
3. As indifference curve shifts from left to right, the consumer's
satisfaction level increases.

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 Marginal Rate of Substitution
When a consumer increases the quantity of a commodity, he has to
sacrifice some quantity of another commodity so that the level of
satisfaction remains the same. Here one commodity is substituted inplace
of the other.
The marginal rate of substitution of good 1 for good 2 is the number of
units of good 2 that the consumer is willing to give up for an additional unit
of good 1, so as to maintain the same level of satisfaction.
The necessary condition for MRS is that while transferring from x to y or y
to x, there should be no change in satisfaction level of the consumer

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Formula:
MRS of X for Y = Change in Y(Reduction)
Change in X(Increament)
OR MRSxy = ▲y
▲x
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 Indifference curve slope and MRS
The marginal rate of substitution of
two commodities can also be
predicted by indifference curve
slope.
The slope at any particular point of
indifference curve states the rate at
which consumer is generally ready
to exchange his one commodity
with other.

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