Analyzing Income Consumption Curve Graph in the Context of
Indifference Curve Approach
Draw a graph of the Income Consumption Curve
Px
10
10
M/Px = 8
Py
8
8
M
80
100
x
3,6
4,6
y
5,5
6,75
MUx
18,5
22,25
MUy
14,8
17,8
Umax
108,6
149,35
M/P'x = 10
M/Py = 10
M/P'y = 12.5
y
12,5
10
6,7
5,5
x
3,
64,
6810
Explanation
:
The analysis of the graph above is that due to the increase in Income (M) from 80 to 100, the
budget line A shifts to the right so that the consumption of goods X and goods Y also rises.
Point B is the highest level of satisfaction in consumption because it is in the upper right
position.