Please enable JavaScript.
Coggle requires JavaScript to display documents.
Optimal consumer's choice - Coggle Diagram
Optimal consumer's choice
Indifference curves
Increase in income
Normal good
Substitution effect: increase in consumption of both products
Inferior good
Substitution effect: decrease in consumption of inferior good toward the other good
Decrease in income
Normal good
Substitution effect: decrease in consumption of both products.
Inferior good
Substitution effect: increase in consumption of inferior, less consumption in the other good
Increase in price of good X
X normal good
X inferior good
Substitution effect: decrease in consumption of good X toward the other goods
Substitution effect: decrease in consumption of good X toward the other good which is cheaper
Decrease in price of good X
X normal good
Substitution effect: increase in consumption of good X from the other good.
X inferior good
Substitution effect: increase in consumption of inferior good.
Budget lines
Increase in income
Normal good
Income effect: increase in consumption of both goods
Inferior good
Income effect: decrease in consumption of inferior good toward higher consumption of a normal good
Decrease in income
Normal good
Income effect: decrease in consumption of both products.
Inferior good
Income effect: increase in consumption of inferior, less consumption in the other good
Increase in price of good x
X normal good
Income effect: decrease in consumption of good X toward the other good which is cheaper
X inferior good
Income effect: decrease in consumption of good X toward the other goods
Decrease in price of good x
X normal good
Income effect: increase in consumption of good X from the other good.
X inferior good
Income effect: increase in consumption of inferior good.