WHAT IS Income consumption curve
An income-consumption curve represents the relationship between a consumer's income and their level of consumption of a particular good or service.
Q&A
The income-consumption curve is typically upward-sloping, indicating that as a consumer's income increases, their consumption of a particular good or service also increases.
Q&A
The shape of the curve can vary depending on the type of good or service being considered. Eg. for normal goods, the curve is upward-sloping, & for inferior goods, it is downward-sloping.
Q&A
The slope of the income-consumption curve measures the marginal propensity to consume (MPC), which is the change in consumption resulting from a change in income.
Q&A
The income-consumption curve can be used to calculate the income elasticity of demand, which measures the responsiveness of demand to changes in income.
Q&A
The curve can also be used to determine a consumer's budget constraint, which represents the combinations of goods and services that a consumer can afford at different income levels.
Q&A
The income-consumption curve is a useful tool for analyzing consumer behavior and making predictions about how changes in income will affect consumer demand.
Q&A
The curve is closely related to the concept of the Engel curve, which represents the relationship between a consumer's income and their level of expenditure on a particular good or service.
Q&A