On a typical optimal choice diagram, with budget lines and indifference curves, the line that connects the consumer's optimal baskets as the price of one good changes holding income and the price of the other good constant is called the consumer's:
A)income-consumption curve.
B)price-consumption curve.
C)demand curve.
D)Engel curve.

Question

Quizplus · Accepted Answer

The line that connects the consumer's optimal baskets as the price of one good changes holding income and the price of the other good constant is called the price-consumption curve. It shows the effect of a change in the price of one good on the consumer's optimal consumption bundle. It allows us to see how the quantity demanded of one good changes as its price changes. The line that connects the consumer's optimal baskets as the price of one good changes holding income and the price of the other good constant is called the price-consumption curve. This curve shows how the quantity demanded of one good changes in response to a change in its price while keeping the other prices constant. It is also known as the demand curve for a single good or a commodity. The price-consumption curve is useful in determining the consumer's preferences and behavior in response to changes in prices. Therefore, the correct answer is B, the price-consumption curve.

On a Typical Optimal Choice Diagram, with Budget Lines and Indifference