Diagram of the Veblen Effect on Optimal Choice
This diagram visualizes how the Veblen effect alters an individual's optimal choice. It is plotted with daily free time (8-24h) on the horizontal axis and consumption (€0-€600) on the vertical axis. The budget line, corresponding to a €30 wage, connects (8, 480) and (24, 0). The diagram contrasts the initial choice, Point E (17, 210), with the new choice after the Veblen effect, Point F (14.3, 290). Point F is the tangency point for a new, convex Veblen indifference curve (VIC2), which is part of a new set of parallel curves representing the changed preferences.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
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