A curve that shows how the best available consumption bundle changes as income changes (holding the consumer's preferences and all other prices fixed)is called:
A) a price-consumption curve.
B) an individual demand curve.
C) an income-consumption curve.
D) a budget line.

Question

Quizplus · Accepted Answer

An income-consumption curve shows the different consumption bundles that a consumer chooses as their income changes while holding all other prices and preferences constant. Therefore, it directly represents the relationship between income and consumption choices of a consumer. Option A is incorrect because a price-consumption curve shows how the quantity demanded changes as the price of a single good changes. Option B is incorrect because an individual demand curve shows how the quantity demanded of a single good changes as its price changes. Option D is incorrect because a budget line shows the different combinations of two goods that a consumer can afford given their income and the prices of the goods.

A Curve That Shows How the Best Available Consumption Bundle