Income Change Analysis and Income Consumption Curve (ICC)
Overview
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:
In the graph above, 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 increases. Point B is the
highest level of satisfaction in consumption because it is in the upper right position. Income can
affect the purchase of goods X and goods Y. The greater the income, the more goods X and Y
are consumed.