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Magazine Chapter 4: Q2. (page 165)
An individual consumes two goods, clothing and food. Given the information below, illustrate both the income-consumption curve and the Engel curve for clothing and food.
PRICE CLOTHING | PRICE FOOD | QUANTITY CLOTHING | QUANTITY FOOD | INCOME |
| \(10 | \)2 | 6 | 20 | \(100 |
| \)10 | \(2 | 8 | 35 | \)150 |
| \(10 | \)2 | 11 | 45 | \(200 |
| \)10 | \(2 | 15 | 50 | \)250 |
Short Answer
The income consumption curve for clothing and food is given below:
The Engel curves for food and clothing are given below:
Step by step solution
Income consumption curve and Engel curve
The Income consumption curve depicts various consumption bundles that a consumer chooses at various levels of income. The Engel curve shows how the consumption of the consumer varies with changes in his income.
Explanation of the graphs
The graph below shows units of clothing on the y-axis and units of food on the x-axis.
As given in the table, the different units of clothing are 0, 6,8,11, and 15 and of food are 20, 35, 45, and 50 at different levels of income. The income consumption curve is drawn corresponding to these units of clothing and food, depicting how a consumer allocates his income between the two.
The Engel graph below shows income along the y-axis and the unit of clothing and food on the x-axis, respectively.
At the different levels of income, the consumer consumes different units of goods. For example, at $100 income, the consumer demands six units of clothing and 20 units of food. Corresponding to different levels of income, the consumption units of food and clothing increase, depicting an upward sloping Engel curve.
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