9. Review Questions
What point is preferred along an indifference curve?
Why do indifference curves slope down?
Why are indifference curves steep on the left and flatter on the right?
How many indifference curves does a person have?
How can you tell which indifference curves represent higher or lower levels of utility?
What is a substitution effect?
What is an income effect?
Does the "income effect" involve a change in income? Explain.
Does a change in price have both an income effect and a substitution effect? Does a change in income have both an income effect and a substitution effect?
Would you expect, in some cases, to see only an income effect or only a substitution effect? Explain.
Which is larger, the income effect or the substitution effect?