Price consumption curve8/30/2023 On the other hand, when the price of commodity on the horizontal axis rises, the budget line will rotate about a pivot point on the Y-axis clock wise (to the left). For fall in the price of commodity ‘X’, the budget line swings to the right and becomes flatter and flatter (as P x/P y falls). In other words, the purchasing power of the consumer in terms of commodity ‘Y’ remains unchanged, equal to OA. With every change in the price of commodity ‘X’, the budget line changes its slope, but its starting point on the Y-axis remains the same, as the price of commodity ‘Y’ is assumed to be constant. The point of equilibrium corresponding to each price change will be given by the point at which the corresponding budget line touches the highest possible indifference curve. ![]() However, if the price of only one commodity (say, ‘X’) changes, with everything else including consumer’s income remaining unchanged, the consumer equilibrium will shift to a new budget line. ![]() The consumer purchases such a combination of commodities on the budget line from which there is no tendency for change or rearrangement.
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