Analyse Indifference Curves and the effect on lower prices. (20)

Explain Utility - satisfaction from consuming good
Indifference curve- shows all combination of 2 goods which give consumer equal utilityDraw Indifference curve with examples.- explains why consumers will normally buy more and lower pricesDraw budget line ( combination of goods afordable with income (demand for good)
Explain equi-marginal principle . MUA/PA = MUB/PB (maximising consumer utility by choosing a combination of goods to maximise their Total utility)
Explain and draw the optimal choice- which is where the 2 curves meet.Show impact of lower price- draw diagram
Income and substitution effects. Normal goods, Inferior goods, Giffen goods.
Limitations:
difficulty in evalutaing utility- no monetary valuedont have to evaluate MU-purchase out of habitconsumer not always rational


Answered by Sulyna A. Economics tutor

1468 Views

See similar Economics GCSE tutors

Related Economics GCSE answers

All answers ▸

How does the World Trade Organisation (WTO) benefit developing countries?


What is an opportunity cost?


Why is the demand for food relatively price inelastic?


Explain what a balance of trade deficit is


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences