Evaluate the use of indifference curve analysis to derive the demand curve for a normal good and the demand curve for an inferior good.

Economics

IGCSE&ALevel

CAIE

Exam No：9708_w23_qp_42 Year：2023 Question No：2

Answer:

7.1.1 definition and calculation of total utility and marginal utility

7.1.2 diminishing marginal utility

7.1.3 equi-marginal principle

7.1.4 derivation of an individual demand curve

7.1.5 limitations of marginal utility theory and its assumptions of rational behaviour

7.2.1 meaning of an indifference curve and a budget line

7.2.2 causes of a shift in the budget line

7.2.3 income, substitution and price effects for normal, inferior and Giffen goods

7.2.4 limitations of the model of indifference curves

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