The price-consumption curve explains how changes in the cost of a good, relative to another good, also effects an individuals consumption choices. The individual demand curve takes a single good and explains the relationship between the cost of that good, and the quantity demanded. Therefore shifts in the indifference curves (PCC) based on consumption possibilities, should correlate to the shifts in the demand curves. The easiest way to look at it, is that that your horizontal axis points on both your budget line, and your individual demand curve, should be the same. Your Vertical axises will differ because they are measuring different costs, ie, monetary cost (Demand Curve) and oppurtunity cost (budget line/constraint).
Income Consumption curve (icc) is a curve which determine the consumption of a consumer base on in his/her income When Income is High, Spending Capacity increases, higher the spending capacity - more the demand. Thus converse to the original demand theory which says, PRICE determines Demand, ICC theory says, INCOME of a PERSON determines the Demand for a Product
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
how is a demand curve derived from individual demand curve ?
NO
price consumption curve :this indicates the income of the consumer being given,how the demand of a good will be effected with change in its price.it means that both price consumption curve and demand curve indicate different quantities of a good demanded by the consumer at different prices.
The derivation of an individual consumer demand curve can be done using the indifference curve approach. This is done by preparing the demand schedule of a consumer from the price consumption curve.
Income Consumption curve (icc) is a curve which determine the consumption of a consumer base on in his/her income When Income is High, Spending Capacity increases, higher the spending capacity - more the demand. Thus converse to the original demand theory which says, PRICE determines Demand, ICC theory says, INCOME of a PERSON determines the Demand for a Product
aggregate demand curve is the total sum of all the individual demand curves while individual demand curve is the demand made by the single individual.
how is a demand curve derived from individual demand curve ?
NO
price consumption curve :this indicates the income of the consumer being given,how the demand of a good will be effected with change in its price.it means that both price consumption curve and demand curve indicate different quantities of a good demanded by the consumer at different prices.
a supply curve and a demand curveA supply curve and a demand curve.
a supply curve and a demand curveA supply curve and a demand curve.
From the question I believe you know what is price consumption curve, so I start from there. After maximising utility we find the optimal consumption bundle called the demand functions. These demand functions are functions of prices and income. A price consumption curve is the locus of points that connect the optimal demand functions as any one commodity price changes (ceteris paribus). Now if we remember, a demand curve is a downward sloping line in a Price X Quantity framework of a particular good. And it is clear that from the Price consumption curve that as prices increase we reduce the consumption of that commodity and substitute it with the other goods. In a partial equilibrium framework i.e. Price x Quantity framework everything else is held constant, therefore as price of say "Y" increases putting in the demand function we will get that its consumption falls, hence getting a downward sloping DD (demand Curve).
income
The demand curve is negatively sloped because it is based on the principle of marginal utility and this utility decreases as consumption increases. The demand price which depends on the marginal utility of a good also declines as consumption increases, so quantity and price are inversely related, leading to the negative curve and the law of demand.
The MArket Demand Curve