GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Other things remaining the same, when a consumer’s income increases, his equilibrium point moves to
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A lower indifference curve
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A higher indifference curve
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Remains unchanged on the same indifference curve
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To the left-hand side on the same indifference curve
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Explanation:
Detailed explanation-1: -Indifference curves are used in microeconomic studies in order to study consumer preferences. Each point in the indifference curve shows that a consumer is indifferent towards the two products as each of them give them the same utility.
Detailed explanation-2: -Engel Curves are the locus of all points representing the quantities demanded of the goods at various levels of income, when prices and preferences are held constant (Fig. 4.11 for normal goods and Fig. 4.12 for inferior goods). Figure 4.11. Both goods are normal.
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