Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved
Suppose we knew that, for our consumer, TDs are an inferior good. In this case, as her income rises we know that her consumption of TDs will not increase.
On the graph to the right we show the region in which her new consumption bundle must lie if TDs are inferior for this consumer. On the final, highest, budget constraint her bundle must lie somewhere in the red highlighted region if TDs are inferior.
Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved