- How can one explain the shape of indifference curves? If the price of one good falls will the demand for that good always rise?
- Draw indifference curves for (a) perfect substitutes, and (b) perfect complements. In each case, illustrate the effects of a price change, and draw the demand curve for one of the goods.
- Illustrate using indifference curve analysis:
- the difference between substitute and complementary goods;
- the differences between inferior, normal, and luxury goods;
- the effect of a price change on the demand for an inferior good and on the demand for a Giffen good ;
- the case where there are no income effects in the demand for one good.