A price-consumption path is drawn by connecting the
A) various veritcal intercepts of the rotated budget lines
B) various horizontal intercepts of the rotated budget lines
C) points of tangencies between indifference curves and rotated budget lines

Question

Quizplus · Accepted Answer

The price-consumption path shows the changing combination of two goods purchased by a consumer as the price of one good changes while keeping the utility level constant. The points of tangency between indifference curves and rotated budget lines indicate the optimal choice of the consumer at different price levels. Therefore, connecting these points gives us the price-consumption path.

A Price-Consumption Path Is Drawn by Connecting the