The shape and position of the consumer’s indifference curves

The price of A

The price of B

The consumer’s income

A budget line

A demand curve

A price consumption curve

An indifference curve

The line is called an income consumption curve

The line will always slope upwards to the right if both products are normal goods

The line will slope backwards or downwards at income levels where one product is an inferior good

The line may not pass through the origin

There is no income effect because the consumer’s income is unchanged

Between them the income and substitution effects cover the entire change in the quantity that the consumer demands

If the product is normal, the income effect works in the same direction as the substitution effect

If the product is inferior, the income effect works in the opposite direction to the substitution effect

The indifference curves slope downwards to the right because both income and leisure are desirable

The curves get flatter to the right because both income and leisure have diminishing marginal utility

The indifference curves furthest from the original represent the highest total utility

An increase in the wage rate shifts the earnings leisure line, with the new line being parallel to the initial line