Question
Show the derivation of a demand curve from the underlying fundamentals of consumers solving their problem. In other words, show a budget constraint and indifference
Show the derivation of a demand curve from the underlying fundamentals of consumers solving their problem. In other words, show a budget constraint and indifference curve that shows a consumer solving his problem. Then change the price of good 1 (either decrease or increase it) and show the new amount of good 1 consumed (assume the indifference curves are basically parallel and behave "nicely"). Change the price one more time (in the same direction) and show the new amount of good 1 consumed. Plot your three (Q1, P1) points on a separate graph to reveal your demand curve.
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