(Appendix) An income compensated demand curve

Question

Quizplus · Accepted Answer

An income compensated demand curve is a demand curve that holds the consumer's real income constant. This means that the consumer's purchasing power is held constant, and the only thing that is changing is the price of the good. As a result, the income compensated demand curve will be flatter than an ordinary demand curve for a normal good, and steeper than an ordinary demand curve for an inferior good. Additionally, the income compensated demand curve for a Giffen good will be negatively sloped.

(Appendix) an Income Compensated Demand Curve