Income changes and the The Income-Consumption Curve (ICC)
The lefthand panel above depicts one example of an Income-Consumption
Curve (ICC). Derive the ICCs for the other cases shown. For each case:
Step 1: Draw a second budget.line (BLb) tangent to Ub.
Step 2: Label the consumer optimum as point 'b'.
Step 3: Draw an income-consumption curve (ICC) through points 'a' and
'b'.
| Decide whether good X and good Y are normal (N) or inferior
(I) goods for each of the three cases and write down products that might be real-world
examples for each case ((Available online (Java): (i) Basic geometry and (ii) Examples)): |
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Case 1 |
Case 2 |
Case 3 |
| Normal (N) or inferior (I) |
| Good X: |
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| Good Y: |
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| Example: |
| Good X = |
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| Good Y = |
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