managerial economics MBA

1. PRICE CONSUMPTION CURVE
DIPANKAR DUTTA
MBA 1ST SEM

2. Budget line :- It is a line which represent the alternative
combination of two goods with the given money and price of
two goods.

3. Equations of budget line:-
E= Qx.Px + Qy.Py
Slope of budget line:-
Px/Py or Py/Px
Budget constraint:-
Px.Qx + Py.Qy ≤ E
X
Y

4. Change of budget line :-
• Money income ( shift)
• Price of good X
• Price of good Y
Rotation

5. Consumer equilibrium:- A consumer shall be in equilibrium where
he can maximum his utility, subject to his budget constraint (OR)
where the indifference curve and the budget line are
constraint to each other the consumer is attained its Equilibrium.
E is equilibrium point having combinations of X
& Y. Any point C,D,F,G etc. cannot be considered
be optimum point because it lies on a lower
indifference curve than I 3

6. PRICE CONSUMPTION CURVE
Price-consumption curve is a
graph that shows how a
consumer’s consumption
choices change when price of
one of the goods changes. It is
plotted by connecting the
points at which budget line
touches the relevant
maximum-utility indifference
curve.

7. VERIOUS TYPES OF PRICE CONSUMPTION CURVES
Backward sloping PCC
Upward sloping PCC
PCC with varying slope
Horizontal PCC