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INDIFFERENCE ANALYSIS

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INDIFFERENCE ANALYSIS

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    1. INDIFFERENCE ANALYSIS Indifference curves constructing an indifference curve the shape of an indifference curve diminishing marginal rate of substitution an indifference map The budget line constructing a budget line effect of a change in income effect of a change in price

    2. Constructing an indifference curve

    3. Deriving the marginal rate of substitution (MRS)

    4. Deriving the marginal rate of substitution (MRS)

    5. Deriving the marginal rate of substitution (MRS)

    6. An indifference map

    7. A budget line

    8. Effect of an increase in income on the budget line

    9. Effect on the budget line of a fall in the price of good X

    10. INDIFFERENCE ANALYSIS The optimum consumption point equating the marginal rate of substitution with the price ratio The effect of a change in income the income–consumption curve the Engel curve income elasticity of demand and the income–consumption curve the effect of a rise in income on the demand for an inferior good

    11. Finding the optimum consumption

    12. Same slope at t of indifference curve and budget line

    17. Deriving an Engel curve from an income–consumption curve

    18. Deriving an Engel curve from an income–consumption curve

    19. Effect of a rise in income on the demand for an inferior good

    20. Effect of a rise in income on the demand for an inferior good

    21. Effect of a rise in income on the demand for an inferior good

    22. Effect of a fall in the price of good X

    23. Effect of a fall in the price of good X

    24. Effect of a fall in the price of good X

    25. Deriving a demand curve from a price–consumption curve

    26. Deriving a demand curve from a price–consumption curve

    27. Deriving a demand curve from a price–consumption curve

    28. Deriving a demand curve from a price–consumption curve

    29. Deriving a demand curve from a price–consumption curve

    30. INDIFFERENCE ANALYSIS The effect of changes in price the price–consumption curve deriving the individual's demand curve Income and substitution effects of a price change a normal good an inferior good a Giffen good (a special type of inferior good)

    43. INDIFFERENCE ANALYSIS The effect of a change in price on the demand for other goods The usefulness of indifference analysis superiority of using ordinal measures limitations of indifference analysis

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