Notes On Income Consumption Curve

It is thus locus of combinations of the two commodities when the money income is varied and prices of the.

Notes on income consumption curve. In economics and particularly in consumer choice theory the income consumption curve is a curve in a graph in which the quantities of two goods are plotted on the two axes. When the income effect of both. The curve obtained by connecting successive consumer s equilibrium points e 1 e 2 and e 3 in this case at various levels of money income of the consumer other things remaining unchanged is known as income consumption curve. The curve is the locus of points showing the consumption bundles chosen at each of various levels of income.

Income consumption curve traces out the income effect on the quantity consumed of the goods. The income effect in economics can be defined as the change in consumption resulting from a change in real income. Meaning of income consumption curve icc if the different equilibrium points of consumers resulted from the change in income are added then we will get a curve and called income consumption curve. In indifference curve map income consumption curve is the locus of the equilibrium quantities consumed by an individual at different levels of his income.

This is the normal good case. This enables him to move to higher and higher indifference curves and choose a new optimum bundle of x 1 and x 2 the locus of successive optimal equilibrium points is the income consumption curve henceforth icc. Income effect can either be positive or negative. Thus icc is the locus of consumer equilibrium points at various levels of consumer s income when the price of goods consumer s tastes and.

Thus the income consumption curve icc can be used to derive the.