Mankiw's Principles of Microeconomics Chapter 21

This is a complicated chapter.  What did you find most confusing?  What do you think about the concept of indifference curves in the context of budget constraints?

“I can get no remedy against this consumption of the purse: borrowing only lingers and lingers it out, but the disease is incurable.” -Shakespeare

We are a nation of consumers. Even though we may not want to admit it, most of us wish to consume more of the luxuries of life with little to no trade off. The headwinds against consumption are our preferences and our budgetary constraints. In this chapter we define and graph the consumer’s budget constraints. We also measure the preferences of the consumer through indifference curves. An indifference curve is a curve that shows consumption bundles that give the consumer the same level of satisfaction. We can utilize the slope of the indifference curve to determine the rate at which a consumer would trade one good for another, otherwise known as the marginal rate of substitution (MRS). 

A consumer’s choice is dependent on his budget constraint and his preferences for consumption. If we were to display this graphically, the optimum point of consumption would at the point which the indifference curve is tangent to the budget constraint. For the consumer to obtain maximum consumption, he would need choose the point at which the MRS= relative price (rate at which the market would trade one good for another).

Shifts in income can impact the budget constraints line shifting it outward. This shift leads to increase consumption since the consumer will most likely choose the higher indifference curve.

The most confusing part of this chapter for me was trying to find out why there are 2 indifference curves in every example. From my understanding, indifference curves represent different combinations of bundles the consumer could have. If each graph has 1 budget constraint, because there’s only one income, then wouldn't there only be 1 indifference curve, because there’s only one consumer?