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

Indifference curves and budget lines — practice question

(a)[12]

Explain how utility theory may be used to show why a demand curve slopes downward.

(b)[13]

Discuss, using indifference curve analysis, why a fall in sales tax on all goods and services could affect demand for a normal good differently from demand for an inferior good.

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