ECON 3070 Chapter Notes - Chapter 5: Engel Curve, Demand Curve, Inferior Good
Document Summary
What happens to the consumer"s choice of food when the price of food changes while the price of clothing and the amount of income remain constant? two ways to answer: Using the optimal choice diagram draw a curve connecting all of the baskets that are optimal as the price of food changes(price consumption curve) Optimal choice diagram the consumer purchases more food when her income rises. The demand curve the consumer"s demand curve for food shifts out as income rises income consumption curve: the set of utility-maximizing baskets as income varies (and prices and held constant) Engel curve: a curve that relates the amount of a commodity purchased to the level of income, holding constant the prices of all goods the way of showing how a consumer"s choice of a particular good varies with income. Normal good: a good that a consumer purchases more of as income rises.