W hen you walk into a store, you are confronted with thousands of goods that
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| 444 PART VII
tOpICS FOr FUrther StUDY 21-3b How Changes in Income Affect the Consumer’s Choices Now that we have seen how the consumer makes a consumption decision, let’s examine how this decision responds to changes in the consumer’s income. To be specific, suppose that income increases. With higher income, the consumer can afford more of both goods. The increase in income, therefore, shifts the budget constraint outward, as in Figure 7. Because the relative price of the two goods has not changed, the slope of the new budget constraint is the same as the slope of the initial budget constraint. That is, an increase in income leads to a parallel shift in the budget constraint. The expanded budget constraint allows the consumer to choose a better com- bination of pizza and Pepsi, one that is on a higher indifference curve. Given the shift in the budget constraint and the consumer’s preferences as represented by her indifference curves, the consumer’s optimum moves from the point labeled “initial optimum” to the point labeled “new optimum.” Notice that, in Figure 7, the consumer chooses to consume more Pepsi and more pizza. The logic of the model does not require increased consumption of both goods in response to increased income, but this situation is the most common. As you may recall from Chapter 4, if a consumer wants more of a good when her income rises, economists call it a normal good. The indifference curves in Figure 7 are drawn under the assumption that both pizza and Pepsi are normal goods. Figure 8 shows an example in which an increase in income induces the con- sumer to buy more pizza but less Pepsi. If a consumer buys less of a good when her income rises, economists call it an inferior good. Figure 8 is drawn under the assumption that pizza is a normal good and Pepsi is an inferior good. Although most goods are normal goods, there are some inferior goods in the world. One example is bus rides. As income increases, consumers are more likely tải về 1.28 Mb. Chia sẻ với bạn bè của bạn:
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