Constructing Indifference Curves - Part 3

In Parts 1 and 2 of Constructing Indifference Curves our goal was to assemble 90 and 150 skates respectively. Once again we'll increase our assembly quotas.

Goal: 180 Skates

Looking at our data (bottom of the page), it appears that there are 4 ways we can accomplish this task:

1. Sammy works 3 hours (180 skates) and Chris works 0 hours (0 skates)
2. Sammy works 2 hours (150 skates) and Chris works 1 hour (30 skates)
3. Sammy works 1 hour (90 skates) and Chris works 3 hours (90 skates)
4. Sammy works 0 hour (0 skates) and Chris works 6 hours (180 skates)

We can plot these four points and connect the dots to create a line which shows all the possible combinations of labor we can use to assemble 180 skates. In indifference curve 3 this is shown as the yellow line, which is above the purple (150 skates) and blue (90 skates) lines.

Goal: 210 Skates

There are 5 combination of points on our chart that add up to 210:

1. Sammy works 5 hours (210 skates) and Chris works 0 hours (0 skates)
2. Sammy works 3 hours (180 skates) and Chris works 1 hour (30 skates)
3. Sammy works 2 hours (150 skates) and Chris works 2 hours (60 skates)
4. Sammy works 1 hour (90 skates) and Chris works 4 hours (120 skates)
5. Sammy works 0 hour (0 skates) and Chris works 7 hours (210 skates)

We plot our points, connect the dots, and get the light green line as shown in indifference curve 4.

Goal: 240 Skates

There are 6 combination of points on our chart that add up to 240:

1. Sammy works 8 hours (240 skates) and Chris works 0 hours (0 skates)
2. Sammy works 5 hours (210 skates) and Chris works 1 hour (30 skates)
3. Sammy works 3 hours (180 skates) and Chris works 2 hours (60 skates)
4. Sammy works 2 hours (150 skates) and Chris works 3 hours (90 skates)
5. Sammy works 1 hour (90 skates) and Chris works 5 hours (150 skates)
6. Sammy works 0 hour (0 skates) and Chris works 8 hours (240 skates)

We plot our points, connect the dots, and get the dark purple line as shown in indifference curve 5.

Conclusion

From using our productivity data we assembled indifference curves which represents all the combinations of labour that yield the same level of production. These indifference curves are the first step in deciding how many hours each employee should be allocated each day. To finalize our decision, we need to add cost data in the mix. In Indifference Curves and Budget Lines we do just that.