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 (i) the substitution effect of a price change and (ii) the income effect would be the same for a normal good and an inferior good.

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

Discuss how far the law of diminishing marginal utility can be used to explain market demand for a good.

Worked solution & mark scheme

This 25-mark question has a full step-by-step worked solution and mark scheme.

  • Full mark scheme, point by point
  • Step-by-step worked solution
  • Write your answer & get it marked instantly by AI