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#cfa #cfa-level-1 #economics #has-images #microeconomics #reading-14-demand-and-supply-analysis-consumer-demand #subject-4-consumer-equilibrium-maximizing-utility-subject-to-the-budget-contraint
An Increase in Income
An increase in income shifts the budget line out parallel. The new combinations of products that maximise utility can be identified.
If this is a normal good, an increase in income increases the quantity demanded.
Inferior goods have a negative income elasticity of demand. Demand falls as income rises.
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Subject 4. Consumer Equilibrium: Maximizing Utility Subject to the Budget Constraint
ximise utility the consumer would consume Q1 of product A and Q2 of product B. The consumer is maximising utility where the budget line and indifference curve are tangent, i.e., MU B /MU A = P B /P A . <span>An Increase in Income An increase in income shifts the budget line out parallel. The new combinations of products that maximise utility can be identified. If this is a normal good, an increase in income increases the quantity demanded. Inferior goods have a negative income elasticity of demand. Demand falls as income rises. <span><body><html>
Subject 4. Consumer Equilibrium: Maximizing Utility Subject to the Budget Constraint
ximise utility the consumer would consume Q1 of product A and Q2 of product B. The consumer is maximising utility where the budget line and indifference curve are tangent, i.e., MU B /MU A = P B /P A . <span>An Increase in Income An increase in income shifts the budget line out parallel. The new combinations of products that maximise utility can be identified. If this is a normal good, an increase in income increases the quantity demanded. Inferior goods have a negative income elasticity of demand. Demand falls as income rises. <span><body><html>
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