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A community indifference curve is an illustration of different combinations of
commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
quantities that would bring a whole
community A community is a social unit (a group of living things) with commonality such as place, norms, religion, values, customs, or identity. Communities may share a sense of place situated in a given geographical area (e.g. a country, villag ...
the same level of utility. The model can be used to describe any community, such as a town or an entire nation. In a community indifference curve, the indifference curves of all those individuals are aggregated and held at an equal and constant level of
utility As a topic of economics, utility is used to model worth or value. Its usage has evolved significantly over time. The term was introduced initially as a measure of pleasure or happiness as part of the theory of utilitarianism by moral philosoph ...
.


History

Invented by
Tibor Scitovsky Tibor de Scitovsky, also known as Tibor Scitovsky (November 3, 1910 – June 1, 2002), was a Hungarian born, American economist who was best known for his writing on the nature of people's happiness in relation to consumption. He was Associ ...
, a Hungarian born economist, in 1941.


Solving for a CIC

A community indifference curve (CIC) provides the set of all aggregate endowments (\bar, \bar) = (x_1 + x_2, y_1, + y_2) needed to achieve a given distribution of utilities, (\bar, \bar). The community indifference curve can be found by solving for the following minimization problem:
\min \bar \text U_1(x_1, y_1) \geq \bar \text U_2(\bar, \bar - 1) \geq \bar
CICs assume allocative efficiency amongst members of the community. Allocative Efficiency provides that MRS_1 xy = MRS_2 xy. The CIC comes from solving for \bar in terms of \bar, y_(\bar). Community indifference curves are an aggregate of individual indifference curves.


See also

*
Indifference curve In economics, an indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is ''indifferent''. That is, any combinations of two products indicated by the curve will provide the c ...


References

Albouy, David. "Welfare Economics with a Full Production Economy." Economics 481. Fall 2007.
Deardorff's Glossary of International Economics.
{{Economics-stub Welfare economics