income-consumption curve

Income-consumption curveclick for a larger image
Fig. 88 Income-consumption curve. (a) An income-consumption curve for a NORMAL PRODUCT where, as income rises, the demand for the product also rises.

(b) An income-consumption curve for an INFERIOR PRODUCT where, as income rises, buyers purchase less of the product, generally because they can now afford to buy more expensive alternatives.

income-consumption curve

a line that depicts the relationship between consumer INCOME and the quantity of a product demanded (see DEMAND) on a graph. See Fig. 88 . The slope of the income-consumption curve reflects the INCOME-ELASTICITY OF DEMAND, a steeply sloping curve indicating inelastic demand, with small changes in quantity demanded resulting from large changes in income, and vice-versa.