Price consumtion curve

managerial economics MBA

1. PRICE CONSUMPTION CURVE DIPANKAR DUTTA MBA 1 ST SEM

2. Budget line :- It is a line which represent the alternative combination of two goods with the given money and price of two goods.

3. Equations of budget line:- E= Qx.Px + Qy.Py Slope of budget line:- Px/Py or Py/Px Budget constraint:- Px.Qx + Py.Qy ≤ E X Y

4. Change of budget line :- Money income ( shift) Price of good X Price of good Y Rotation

5. Consumer equilibrium:- A consumer shall be in equilibrium where he can maximum his utility, subject to his budget constraint (OR) where the indifference curve and the budget line are constraint to each other the consumer is attained its Equilibrium. E is equilibrium point having combinations of X & Y. Any point C,D,F,G etc. cannot be considered be optimum point because it lies on a lower indifference curve than I 3

6. PRICE CONSUMPTION CURVE Price-consumption curve  is a graph that shows how a consumer’s consumption choices change when price of one of the goods changes. It is plotted by connecting the points at which budget line touches the relevant maximum-utility indifference curve.

7. VERIOUS TYPES OF PRICE CONSUMPTION CURVES Backward sloping PCC Upward sloping PCC PCC with varying slope Horizontal PCC