An income consumption curve icc if both x and y are normal

Question

Microsoft Word - Problem Set 3 (Questions)

1. For each of the following, sketch a curve with the appropriate shape given the assumptions:
   1. An Engel curve for x, where preferences for x and y take a Cobb-Douglas form.
   2. An Income Consumption Curve (ICC), if both x and y are normal at lower levels of income, whilst at higher income levels, y is inferior.
   3. A Price Consumption Curve (PCC) for y, where the demand for y is perfectly price-inelastic.