Ask the Chatbot Games & Quizzes History & Society Science & Tech Biographies Animals & Nature Geography & Travel Arts & Culture ProCon Money Videos
price-consumption curve
References
Images
Figure 6: Priceā€“consumption curve (see text).
Britannica AI Icon

price-consumption curve

economics
Written by
The Information Architects of Encyclopaedia Britannica

The Information Architects maintain a master list of the topics included in the corpus of  EncyclopƦdia Britannica, and create and manage the relationships between them.
The Information Architects of Encyclopaedia Britannica
Last updated

Quick Summary

Figure 6: Priceā€“consumption curve (see text).
Figure 6: Priceā€“consumption curve (see text).

The price-consumption curve in economics illustrates how a consumer's purchasing behavior changes in response to variations in the price of a specific good, while keeping income and other prices constant.1

As the price of a good changes, the consumer's budget line shifts. The price-consumption curve is a locus of points representing the optimal consumption bundles at each price level, found where the budget line is tangent to the consumer's indifference curves. This curve helps visualize the substitution effect and the income effect of price changes on demand. It is a fundamental tool for understanding how consumers adjust their spending habits in response to price fluctuations, ultimately contributing to the shape of the demand curve.12

Summary created from Britannica articles using AI. AI can make mistakes, so verify using Britannica articles.
2 Britannica Sources
  1. utility and value
  2. supply and demand

Ask Britannica AI about this topic

Britannica doesn't have a full article on this topic, so we've curated a list of our relevant coverage.