A demand curve shows how much quantity of a good will be purchased or demanded at various prices, assuming that tastes and preferences of a consumer, his income, prices of all related goods remain constant. This demand curve showing explicit relationship between price and quantity demanded can be derived from price consumption curve of indifference curve analysis. In Marshallian utility [...]
Indifference curve analysis with its technique of looking upon the price effect as a combination of income effect and substitution effect explains relationship between price and quantity demanded in a better and more analytical way. A distinct advantage of viewing the price effect as a sum of income effect and substitution effect is that through it the nature of response [...]
As price of a good X falls, other things remaining the same, consumer would move to a new equilibrium position at a higher indifference curve and would buy more of good X at the lower price unless it is a Giffen good. Thus, in the Fig. 8.43 the consumer who is initially in equilibrium at Q on indifference curve IC1 [...]