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 how the best available consumption bundle changes as income changes. It holds the consumer's preferences and all other prices fixed, so it isolates the effect of changes in income on consumption choices. A price-consumption curve shows how the best available consumption bundle changes as the price of one good changes, while holding income and all other prices fixed. An individual demand curve shows the quantity of a good that a consumer is willing and able to buy at each price, holding all other factors constant. A budget line shows the combinations of two goods that a consumer can afford to buy with a given income and prices.

A Curve That Shows How the Best Available Consumption Bundle