Engel Curves
engel - essentially just demand curves, except w/ respect to income
- axes changes to income and just 1 good
- normal good - increased income >> increased consumption
- inferior good - increased income >> decreased consumption
- take demand curve C = (4/5) (I/PC) for instance
- C changes w/ I >> linear relationship
- I is independent variable, C is dependent
- engel curve would be linear line
- income consumption curve for an inferior good
- consumption of good 1 decreases w/ increasing income by the 3rd budget line >> good 1 is an inferior good
- consumption of good 2 increases w/ increasing income >> normal good
Subject:
Economics [1]
Subject X2:
Economics [1]