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We know how to represent changes in demand as price or income changes on a graph

We know how to represent changes in demand as price or income changes on a graph

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We know how to represent changes in demand as price or income changes on a graph,  but how can we show preferences? What makes buyers happy and how can we  measure that happiness? Economists use the term utility when referring to the level of  happiness or satisfaction that someone experiences from buying (or selling) goods and  services: the more utility, the happier the person. Utility is typically represented on a  graph in an indifference curve. An indifference curve represents all of the different  combinations of two goods that generate the same level of utility. What this means is  that each point on an indifference curve represents a combination of goods. All points  on one indifference curve give the person the exact same amount of happiness. For  instance, if you give Jim a choice between points A and B on this indifference curve, he  won't really mind either way, he is indifferent. One shirt and two hats makes him just as 
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