As You Move Down an Indifference Curve, the Absolute Value

question 243

Multiple Choice

As you move down an indifference curve, the absolute value of the slope

• A) increases.
• B) decreases.
• C) remains constant.
• D) initially decreases and then increases.

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Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes in response to changes in the consumer's income.

Midpoint Method

A technique used to calculate the percentage change between two values, avoiding the problem of path dependency by using the average of the initial and final values as the base.

Normal Goods

Goods for which demand increases as the income of individuals increases.

Income Elasticity of Demand

A gauge for the sensitivity of demand for an item to shifts in the income levels of buyers.