this way, the indifference curve approach allows for a range of possible responses. However, if both goods are

normal goods, then the typical response to a higher level of income will be to purchase more of them—although

exactly how much more is a matter of personal preference. If one of the goods is an inferior good, the response

to a higher level of income will be to purchase less of it.

Responses to Price Changes: Substitution and Income Effects

A higher price for a good will cause the budget constraint to shift to the left, so that it is tangent to a lower

indifference curve representing a reduced level of utility. Conversely, a lower price for a good will cause the

opportunity set to shift to the right, so that it is tangent to a higher indifference curve representing an

increased level of utility. Exactly how much a change in price will lead to the quantity demanded of each good

will depend on personal preferences.
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