September 6, 2020

Income Effect and Income Consumption Curve

6 Comments / Microeconomics, Study Materials /

The income of the consumer is also one of the major factors affecting the consumer’s equilibrium or objective of utility maximization. Consumer’s purchase decision of goods and services changes with the change in his/her income size because the size of income defines the consumer’s ability to pay and purchase. Here we will explain the meaning […]

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Price Effect and Price Consumption Curve

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Consumer’s equilibrium is derived under ordinal utility analysis with the assumption of constant money income and prices of the goods. But in reality, consumer preference, money income, and prices are important factors affecting consumers’ objective of utility optimization. A consumer’s preference for goods and services directly changes with the change in income of the consumer

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