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Budget Constraints: Change in Income

Budget Constraints: Change in Income

Author: Justin Tapp
This lesson will explain Budget Constraints: Change in Income
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Notes on "Budget Constraints: Change in Income"

Terms to Know

Normal Goods

Goods for which demand increases as income increases.

Inferior Goods 

Goods for which demand decreases and income increases.

Budget Constraint

The graphical depiction of consumer income relative to the price of goods available. Where the budget constraint touches the highest indifference curve available, the consumer is defined to be optimizing consumption.

Optimal Choice

Goods and services purchased by a consumer that provides the highest level of utility possible.