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Figure 3.6: Karim's Budget Constraint, Feasible Set, and Equation at a €30 Wage
Budget Constraint Graph vs. Income Function Graph
The graphical representation of the budget constraint, which plots consumption against free time, can be viewed as a mirror image of the income function, which plots income against hours worked. Both are depicted as straight lines, and the magnitude of their slope is determined by the wage rate. However, the income function slopes upward (positive slope), reflecting an increase in income with more work, while the budget constraint slopes downward (negative slope), reflecting a decrease in possible consumption with more free time.
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The Economy 1.0 @ CORE Econ
CORE Econ
Ch.3 Scarcity, Work, and Choice - The Economy 1.0 @ CORE Econ
Social Science
Empirical Science
Economics
Related
Budget Constraint Graph vs. Income Function Graph
Infeasibility of Point C in Karim's Choice
A Feasible but Suboptimal Choice (Point D)
Suboptimality of Choices Below the Budget Constraint
Activity: Analyzing the Effect of a Wage Increase on Karim's Budget Constraint
Figure E3.2: Marina’s Feasible Frontier
Calculating the Slope of the Budget Constraint