When The Income Consumption Curve Has A Positive Slope

C both goods are inferior.

When the income consumption curve has a positive slope. This set is often in folders with. In figure 3 the income consumption curve bends back on itself as with an increase income the consumer demands more of x 2 and less of x 1. When the income effect of both the goods represented on the two axes of the figure is positive the income consumption curve icq will slope upward to the right as in fig. The income consumption curve in this case is negatively sloped and the income elasticity of demand will be negative.

This is the normal good case. Here the income effect is also positive and both x and y are normal goods. Income effect can either be positive or negative. If the price of good y increases and the income.

The first type is explained above in figure 12 14 where the icc curve has a positive slope throughout its range. The good on the horizontal x axis is inferior. When the income consumption curve has a positive slope throughout its entire length we can conclude that. The good on the vertical y axis is inferior.

We can have five types of income consumption curves. Sometimes it is called the income offer curve or the income expansion path. Suppose the income consumption curve for goods x and y is upward sloping. D both goods are normal.

It is plotted by connecting the points at which budget line corresponding to each income level touches the relevant highest indifference curve. Work against each other. The locus of successive optimal equilibrium points is the income consumption curve henceforth icc. If both x 1 and x 2 are normal goods the icc will be upward sloping i e will have a positive slope as shown in fig.

When the income consumption curve has a positive slope throughout its entire length we can conclude that. Income consumption curve traces out the income effect on the quantity consumed of the goods. When the income consumption curve has a positive slope throughout its entire length we can conclude that both goods are inferior. B the good on the horizontal x axis is inferior.

For an inferior good the income and substitution effects. The substitution effect results in a change in rice consumption and the income effect leads to a change in rice consumption. Both goods are normal. Also the price effect for x 2 is positive while it is negative for x 1.

Income consumption curve is a graph of combinations of two goods that maximize a consumer s satisfaction at different income levels.