Criticism of the indifference Curve Analysis

  1. The indifference curve analysis is based on the wrong assumption that the consumer is familiar with his entire preference schedule. It may not be realistic on our part to make this assumption because it is not physically possible for a consumer to have complete knowledge of all the combinations of the tow goods, which afford him equal satisfaction.
  2. It is pointed out that indifference curve analysis tells us nothing new. It has hardly contributed any concept, which has not already been established by the utility analysis.
  3. The indifference curve analysis is based on the assumption of economic rationality. Like the old utility analysis is also built upon the assumption that the consumer behaves in a irrational manner when it comes to spending money on goods.
  4. The indifference curve analysis is based on the usual assumption that the consumer spends his money income on more than two goods.
  5. The indifference curve analysis is only micro economic in character. It deals only with the choice of an individual consumer or it studies the equilibrium of an individual consumer. It throws little light on the analysis of group choices or group equilibrium.
  6. The indifference curve analysis involves the unrealistic assumption of continuity. Indifference curves are continuous curves on which are located all possible conceivable combinations of the two goods whether they are actually available in the market or not. It is quit possible that the price line comes to be tangent to an indifference curve at point representing a particular combination, which is not actually available in the market.
  7. The indifference curve analysis is not very amenable to empirical research. In utility analysis there is a great scope for empirical research we can collect the actual market prices and also fined out the quantities available at those prices.
  8. This analysis is based upon the weak-ordering hypothesis. According to this hypothesis, the consumer can be indifferent between certain combinations of the two goods. This position of indifference assumed by the indifference curve analysis is quite unrealistic according to the critics.
  9. The indifference curve analysis is exceedingly complicated. Unlike the comparatively simple utility analysis the indifference curve analysis is very complex and complicated necessitating s sufficiently developed level of understanding.
  10. The analysis is predominantly introspective. Prof. Samuelson has criticized the indifference curve analysis on the ground that it studies consumer’s behavior on the basis of imaginary drawn indifference curves. It is an account of this basic defect that he has recently developed his behaviorist method of deriving the theory of demand.

Despite these defect and draw backs the fall remains that the indifference curve analysis marks a considerable improvement over the conversational utility analysis.

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