Indifference Curve

 

Marshall’s utility concept causes enormous difficulty in the analysis of demand. This concept assumes too much namely a utility is measurable, it is a subjective phenomenon, marginal utility of money is constant and utility from one commodity depends on its own consumption. Modern economists like Prof. J. R. Hicks and R. G. Allen attacked these assumptions. Further they argued that it is not at all necessary to measure utility for the purpose of economic analysis. What we need to know is whether a certain combination of goods has the same utility to the consumer as another combination of the same goods or whether one combination is preferable to another combination. Thus modern economies has done away with utility analysis and evolved the concept of indifference curve. The indifference curve analysis is an improvement over utility analysis and has removed unrealistic assumptions of it.

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