You have just constructed what is called an


Draw an indifference map with several indifference curves and several budget constraints corresponding to different possible levels of income. Note that these budget constraints should all be parallel because only income changes, not prices. Now find some optimizing (tangency) points. Join all of these points. You have just constructed what is called an income-consumption curve. Can you understand why it is called an income-consumption curve?

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Econometrics: You have just constructed what is called an
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