The set of income-quantity pairs showing the amount of a good the consumer buys at various levels of income is called
A) a compensated demand curve.
B) a budget line.
C) an income-elasticity curve.
D) an Engel curve.

Question

Quizplus · Accepted Answer

The set of income-quantity pairs showing the amount of a good the consumer buys at various levels of income is called an Engel curve. The other options are not applicable to this definition. A compensated demand curve shows the quantity of a good demanded when the price of the good changes, while holding the consumer's utility constant. A budget line shows the various combinations of two goods that can be purchased with a given level of income and prices of the two goods. An income-elasticity curve shows how the quantity demanded of a good changes when income changes, while holding the price of the good constant.

The Set of Income-Quantity Pairs Showing the Amount of a Good