A price effect describes how a change in the cost of a good changes the amount consumers buy.
Tag: indifference curves
causes of a shift in the budget line
A budget line shift occurs when there is a change in a consumer’s purchasing power, affecting the combinations
indifference curve
An indifference curve is a graph showing different combinations of two goods that provide a consumer with the
limitations of the model of indifference curves
The indifference curve model is a tool used in economics to understand consumer choices. However, it has several
Giffen goods
A Giffen good is a rare type of inferior good where the amount people want to buy increases
substitution effect
The substitution effect explains how people change their buying habits when the price of a product changes, while
income effect
The income effect explains how a change in the price of a product affects a consumer’s purchasing power
budget line
A budget line, also known as a budget constraint, shows all possible combinations of two goods that a