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

Indifference curves and budget lines — practice question

(a)[12]
  • Explain, using a budget line diagram, whether the substitution effect of a price change would be alike for a normal good and an inferior good. [6]
  • Explain, using a budget line diagram, whether the income effect would be alike for a normal good and an inferior good. [6]
(b)[13]

Discuss the extent to which the law of diminishing marginal utility may be applied to determine the market demand for a good.

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