Asked by
Austin Codrington
on Oct 14, 2024Verified
Suppose a consumer has strictly convex preferences and her Engel curve for a good is a vertical line for some range of income.In that same income range, her demand curve for the good slopes down.
Engel Curve
A graphic representation showing how a consumer's demand for a good varies with income, keeping other factors constant.
Strictly Convex Preferences
Preferences where consumers always prefer mixtures of goods to extremes, demonstrating a consistent desire for variety.
Demand Curve
A graphical representation in economics that shows the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at varying price levels.
- Discern how income and price changes affect consumption bundle choices among different preferences (strictly convex, perfect substitutes, and perfect complements).
- Illustrate the relation between Engel curves and demand curves in consumer demand theory.
Verified Answer
AA
Learning Objectives
- Discern how income and price changes affect consumption bundle choices among different preferences (strictly convex, perfect substitutes, and perfect complements).
- Illustrate the relation between Engel curves and demand curves in consumer demand theory.