CAIE A-Level Economics 7.2.1 Indifference curves & budget lines

CAIE A-Level Economics 7.2.1 Indifference curves & budget lines
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

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

How this is tested

  • 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

Question 2

[Maximum number: 1]

The diagram shows a consumer's budget line.

Figure for Question 2 — CAIE A-Level Economics

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