Question

Explain and show graphically what are engel curves

Answer 1

In microeconomics, an Engel curve portrays how household expenditure on a specific decent or administration changes with household pay. There are two assortments of Engel curves. Spending share Engel curves depict how the extent of household salary spent on a decent differs with pay.

The Engel curve of an individual purchaser can be acquired from his ICC. As, each point on the ICC for an individual buyer like the curve given in chart below is a blend of three things—his cash salary (M), his interest for good X and that for good Y.

For instance, the point E1 is a blend of cash pay, L1M1 i.e., the cash pay spoke to by the spending line L1M1, interest for good X = x1 and the interest for good Y = y1, i.e., the point E1 is a mix (L1M1, x1, y1). So also, the point E2 is a mix of (L2M2, x2, y2, etc.

Along these lines, the focuses on the ICC in chart gives a lot of combi­nations of cash pay and interest for X like (L1M1, x1), (L2M2, x2), and so forth and another arrangement of mixes of cash salary and the interest for good Y like (L1M1, y1), (L2M2, y2), and so on.