EC 100

MICRO

CONSUMER CHOICE

Online Texts

Slides

Optimal Basket changed preferences changed income changed price
Full graphics

 

up_

Consumer Choice III

down

Effect of Changed Income

 

Notation

I

Income

 

 

pa

price of apples

pb

price of bananas

qa

quantity of apples

qb

quantity of bananas

 

 

Budget Constraint

up_

=  paqa  pbqb

Income equals expenditure on apples plus expenditure on bananas

Assume:

= 120  ; p10  ;   p10 ;

down

120  =  10qa  10qb

   q=  12 - 1qa 

Change of
Income

changeofincome

 

 

 

 

 

 

up_

down