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CAIE A-Level Economics 7.2.1 Indifference curves & budget lines

Practise reading indifference curve and budget line diagrams to identify feasible bundles, preferences and consumer equilibrium.

Syllabus
2026–2028
Course
Economics 9708
Level
A2

Exam points

  • interpret what a budget line shows about affordable combinations at a given income
  • use indifference curves and a budget line to identify maximum consumer satisfaction
  • distinguish curve slope, convexity and higher indifference curves in diagram choices

7.2.1—Indifference curves and budget lines question 1

[Maximum number: 1]

The diagram shows a consumer's budget line.

Figure for Question 7.2.1—Indifference curves and budget lines question 1 — CAIE A-Level Economics A2

What determines the slope of the budget line?

A

the marginal rate of substitution of good X for good Y

B

the price of good X multiplied by the price of good Y

C

the ratio of the price of good X to the income of the consumer

D

the ratio of the price of good⁡X\operatorname{good} X to the price of good⁡Y\operatorname{good} Y

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