We will now explain how the consumer reacts to charges in the price of a good, his money income, tastes and prices of other goods remaining the same. Price effect shows this reaction of the consumer and measures the full effect of the change in the price of a good on the quantity purchased since no compensating variation in income [...]
The knowledge of the concept of budget line is essential for understanding the theory of consumer's equilibrium. A higher indifference curve shows a higher level of satisfaction than a lower one. Therefore, a consumer in his attempt to maximise his satisfaction will try to reach the highest possible indifference curve. But in his pursuit of buying more and more goods [...]
We now proceed to derive from indifference curve analysis a law of demand which should state in general terms the relationship between price and quantity demanded of a good. In other words, we will try to derive a general demand theorem which describes the direction in which quantity demanded of the good will change as a result of a change [...]