Price changes

Consider the sequence of optimal consumption points as a decline in the price of X moves you from a to d in the diagram to the right.

Step 1: Add indifference curves Ub and Ud to the top diagram.

The Price Consumption Curve (PCC)

Step 2: Draw a curve through the optimal consumption points in the top diagram. The curve you have drawn is the consumer's price-consumption curve (PCC).
A price-consumption curve (PCC) traces out how the consumption of X changes as the relative price of X changes, holding money income constant.

Consumer Demand

Step 3: Use information from the indifference curve/budget line diagram to complete the following table:

	BL/IC information		Demand information
Case	X	Y	Px/Py	Qx
a
b
c	6	4	1.33	6
d

Step 4: In the lower right hand panel, plot the consumer's demand curve.

(Available online (Java): PCC and demand geometry)