Indifference Curves

9. Review Questions

Exercise B1

What point is preferred along an indifference curve?

Exercise B2

Why do indifference curves slope down?

Exercise B3

Why are indifference curves steep on the left and flatter on the right?

Exercise B4

How many indifference curves does a person have?

Exercise B5

How can you tell which indifference curves represent higher or lower levels of utility?

Exercise B6

What is a substitution effect?

Exercise B7

What is an income effect?

Exercise B8

Does the "income effect" involve a change in income? Explain.

Exercise B9

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?

Exercise B10

Would you expect, in some cases, to see only an income effect or only a substitution effect? Explain.

Exercise B11

Which is larger, the income effect or the substitution effect?