Indifference curves and budget lines can be used to derive an individual's demand curve for a product.

Question

Quizplus · Accepted Answer

Indifference curves represent combinations of goods that provide the same level of utility to the consumer, while budget lines represent the combinations of goods that a consumer can afford given their income and the prices of goods. By examining how the point of tangency between an indifference curve and a budget line changes as the price of a good changes, one can derive the individual's demand curve for that good, showing the relationship between the price of the good and the quantity demanded.

Indifference Curves and Budget Lines Can Be Used to Derive