Question

Explain what a value map is and what it is showing. In your answer describe the purpose of the axes and what the indifference curve means.

Answer 1

A value map is a 2D graph that shows the relationship between the price and quantity of a good or service. Price is on Y-axis and the quantity is on X-axis.

The value map is consumer-centric. The purpose of the axes is very clear as Y-axis shows the price and the X-axis shows quantity. So it shows the behavior of the consumer at different prices.

The indifference curve is the relationship between 2 goods. One good on X-axis and other on Y-axis. It shows the satisfaction level of consumer by consuming the combination of 2 goods. The satisfaction level across the IC is the same. In order to increase the consumption of one good, individual needs to sacrifice some units of other goods.