In deriving an income-consumption curve,it is assumed that:
A)nominal income is constant.
B)the prices of all but one good are held constant.
C)the consumer's preferences may change.
D)the consumer's income changes.

Question

Quizplus · Accepted Answer

In deriving an income-consumption curve, the assumption is made that the consumer's income changes. This is because the income-consumption curve shows the relationship between changes in income and the corresponding change in consumption of a particular good, assuming that all other factors remain constant. Therefore, the income level of the consumer is an important variable that needs to be considered in deriving the income-consumption curve.

In Deriving an Income-Consumption Curve,it Is Assumed That