Final answer:
Indifference curves represent different levels of utility with higher curves indicating greater utility. Situated further from the origin, these curves show combinations of goods that provide more satisfaction. The position and movement between these curves also reflect substitution and income effects due to price changes.
Step-by-step explanation:
To determine which indifference curves represent higher or lower levels of utility, we must understand that indifference curves are graphical representations of all the combinations of goods that give a consumer the same level of satisfaction or utility. Generally, each curve corresponds to a different level of utility. Higher indifference curves represent higher utility because they are further from the origin. This implies that the combination of goods on these curves provides greater utility to the consumer than combinations on curves closer to the origin.
Indifference curves can also show the income and substitution effects of a change in the price of a good. For example, an increase in price may cause a consumer to substitute away from the more expensive good (substitution effect), or it may reduce the consumer's overall purchasing power (income effect), both of which may result in a movement to a different indifference curve, indicating a change in the level of utility.