Income consumption curve (ICC)
Income consumption curve is the locus of equilibrium points, at various levels of consumer’s income, when price of goods, consumers taste & habits etc. remains constant.
AB, CD, EF are 3 budget line. I1, I2, I3 are 3 indifference curve.
At the preliminary stage budget line AB and IC is I1 and equilibrium point is R. As income increases budget line shifted new line is CD, new IC is I2 and equilibrium is S. If income further increase budget line will be EF, IC is I3 and new equilibrium is T. If we add the equilibrium points at different. Income level we get a curve and it is the ICC curve.
Income consumption curve is the locus of equilibrium points, at various levels of consumer’s income, when price of goods, consumers taste & habits etc. remains constant.
AB, CD, EF are 3 budget line. I1, I2, I3 are 3 indifference curve.
At the preliminary stage budget line AB and IC is I1 and equilibrium point is R. As income increases budget line shifted new line is CD, new IC is I2 and equilibrium is S. If income further increase budget line will be EF, IC is I3 and new equilibrium is T. If we add the equilibrium points at different. Income level we get a curve and it is the ICC curve.
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