Economics 9708 · AS & A Level · Indifference curves and budget lines

Indifference curves and budget lines — practice question

The diagram illustrates two indifference curves together with two budget lines for goods X and Y. The starting point is P. The movement from P to R represents a substitution effect. The movement from R to S represents an income effect. What kind of good is good X?

  • Aa Giffen good
  • Ba luxury good
  • Ca normal good but not a luxury good
  • Dan inferior good but not a Giffen good

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