For the Income-Consumption Line & Engel Curve: (kindly place Good A on the X-axis & Good B on the Y-axis) If the consumer's tastes are given by the Indifference curves schedule and Pa = P1.00, Pb= P1.00 and original budget = P10.00, what happens if budget decreases to P6.00 and then increases to P14.00, assuming that tastes and prices of the two goods are constant. Create the new budget schedules.

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A:

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Revealed Preferences and Budget Constraint Analysis

Revealed means “Let Out,” and Preference means “Choice”; Choice Reveals Preference.