21. The indifference curves and budget constraint can be used to predict the effect of changes to the budget constraint. 22. Another investor having other sets of indifference curves might have some different portfolio as his best / optimal portfolio. 23. Normally, I would find this easy to graph, creating the indifference curves eqyal to a fixed C. 24. The theory of indifference curves was developed by Pareto and others in the first part of the 20th century. 25. For a given pair of goods, many indifference curves can be drawn and placed next to each other. 26. In the illustration below this corresponds to an imaginary budget constraint denoted SC being tangent to the indifference curve I1. 27. A line connecting all points of tangency between the indifference curve and the budget constraint is called the expansion path. 28. A social indifference curve drawn from an intermediate social welfare function is a curve that slopes downward to the right. 29. At this equilibrium point, the slope of the highest indifference curve must equal the slope of the production function. 30. These developments were accompanied by the introduction of new tools, such as indifference curves and the theory of ordinal utility.
