An indifference map can be used to find a demand curve for a consumer.Given an initial equilibrium point,to find a demand curve for good X,change the:
A) consumer's income and draw a new budget constraint.
B) price of Y and draw a new budget constraint.
C) consumer's preferences.
D) price of X and draw a new budget constraint.
E) price of a substitute and draw a new budget constraint.

Question

Quizplus · Accepted Answer

To find the demand curve for good X, we need to change the price of X and draw a new budget constraint. This allows us to see how the consumer's optimal consumption bundle changes at different prices of X, which can then be used to plot the demand curve for X. Changing the consumer's income or preferences or the price of a substitute won't directly give us information about the demand curve for X. Changing the price of Y would give us information about the substitution effect, but not the overall demand curve.

An Indifference Map Can Be Used to Find a Demand