Macroeconomics - Short Question Answer
Here in this section of Macroeconomics Short Questions Answers, We have listed out some of the important Short Questions with Answers which will help students to answer it correctly in their University Written Exam.
1. Individual Demand
Price-consumption curve – Curve tracing the utility-maximizing combinations of two goods as the price of one changes.
Individual demand curve – Curve relating the quantity of a good that a single consumer will buy to its price. This curve has to important properties:
- The level of utility that can be attained changes as we move along the curve
- At every point on the demand curve, the consumer is maximizing utility by satisfying the condition that the marginal rate of substitution (MRS) of good X for good Y equals the ratio of the prices of good X and good Y.
Income-consumption curve – Curve tracing the utility-maximizing combinations of two goods as a consumer’s income changes.
**Normal goods are those, which consumers want to buy more of them as their income increases. Inferior are those, which the consumption falls when the consumer’s income increases (the income-consumption curve bends backwards as the income increases).
Engel curve – Curve relating the quantity of a good consumed to income.
