Indifference Curves!

by on June 14, 2017 at 10:54 am in Economics, Education | Permalink

The latest video in our Principles of Microeconomics course at MRUniversity is on indifference curves (earlier videos covered marginal utility and budget constraints). In at least one way this video is better than any we have previously done.

As always, these videos go great with our beautiful textbook Modern Principles of Economics.

1 Dick the Butcher June 14, 2017 at 12:34 pm

I’m anxiously anticipating the post on the “Indecent Curve.”

2 xoxo June 14, 2017 at 4:32 pm

* could you elaborate fully what that is?

3 y81 June 14, 2017 at 1:46 pm

I wonder how Cowen and Tabarrok’s presentation of this topic differs from Mankiw’s, given that they both use pizza and coke as the two commodities being traded off.

4 Dan Lavatan-Jeltz June 14, 2017 at 6:22 pm

Coffee has negative utility. No wonder every state except Utah is going to fail.

5 Ray Lopez June 14, 2017 at 6:57 pm

I read somewhere that indifference curves, though logically they make sense, have never been measured. And their hyperbolic shape, like the Cobbs-Douglas production curve in economics, is complete fiction and just used to make the math easier.

6 M.S. June 14, 2017 at 11:17 pm

I do not like how the instructor says that coffee and pizza are things that “bring us utility.” I think this is imprecise language that can be one of the things that misleads smart undergraduates and makes them distrust economics. It sort of implies that economics is based on psychological claims about pleasure and internal mental states, which we can then use to predict people’s preferences and choices.

The way micro theory actually works is sort of backwards from that. All it says is, “people have preferences, and as long as those preferences are transitive (that is, consistent), we can rank-order people’s preferences over all possible combinations of goods using a function, which we call a utility function.” So economics is not making some psychological claim that people get some kind of internal fuzzy feeling from goods; it’s just saying that we can describe people’s preferences (and thus the choices they would make under various constraints) using some mathematical function.

So when people say “people prefer XYZ because they get utility from XYZ,” what they’re actually saying is that “people prefer XYZ because they prefer from XYZ,” which drives me nuts.

Maybe I’m being ornery. But I find that when people talk about utility functions in this vague and backwardish way it can lead to lots of confusion and endless semantic debates.

7 Brandon Berg June 15, 2017 at 4:07 am

Meh.

8 Nathaniel Malkus June 15, 2017 at 2:53 pm

Nice, but utility via smiley faces are backwards on the graph of “bads.”

9 Ricky Tylor June 15, 2017 at 4:50 pm

It’s nice watching the video about indifferent curves, I believe that we need to put a lot of interest into these things since it can have huge impact on overall happening. If we work it out correctly then we could gain or else we might struggle. I do trading only and due to broker like OctaFX, I really work it out smoothly and with their market analysis and insights, it’s really easier to work out and benefits us in great way.

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