How can one event move along an Engel curve while shifting a demand curve?
A variable on an axis creates movement along a curve; an off-axis variable shifts it.
Follow the cause and effect
Derive Marshallian demand from the consumer problem.
Vary income at fixed prices to trace the Engel curve.
Vary own price at fixed income to trace the demand curve.
The model you are using
Conditions for this model
The shared experiment uses U=√(xy), positive prices and divisible goods. Engel holds both prices fixed; demand holds m and py fixed. The separate α=0.4 example is explicitly labelled.
The exam trap
Do not call an income change movement along demand because income is not on the P–Q axes.
Connect the reasoning to the graph
What changes
- Higher income moves along Engel and, for a normal good, shifts demand right at the original price.
What stays fixed
The shared experiment uses U=√(xy), positive prices and divisible goods. Engel holds both prices fixed; demand holds m and py fixed. The separate α=0.4 example is explicitly labelled.
Keep these conditions throughout the comparison; change only what the case above specifies.
What to inspect
Vary own price at fixed income to trace the demand curve.
Compare before and after, and locate the conclusion on the graph.
5 MINUTES · TRANSFER THE IDEA
Can you explain it without the lesson?
Explain how Engel and demand respond when income elasticity is negative.