Why do you choose one combination of goods over another when shopping?

Professor Joana Girante explains how economists model consumer preferences using indifference curves. This video breaks down how your income, prices, and personal tastes interact to determine the combinations of goods that provide you with the same level of satisfaction.

Economists use the term utility to describe the level of satisfaction or happiness a consumer derives from a specific combination of goods. An indifference curve maps out various combinations of items, such as pizza and coffee, that yield the exact same utility, leaving the consumer indifferent between them.

The video explores the mechanics of these curves, including the concept of the marginal rate of substitution. It also examines how the shape of an indifference curve shifts based on whether goods are perfect substitutes or perfect complements, providing a visual framework for understanding complex spending decisions.

Source: Indifference Curves