Question

In a two-goods consumption framework, Engel curve shows the relationship between ..........

• A. price of one good and quantity demanded of the other good
• B. relative price of the goods and ratio of their quantities demanded
• C. income and quantity demanded of one of the goods
• D. income and the ratio of quantities demanded of the two goods

Hint:

The Engel curve shows how the demand for a good changes as income changes, illustrating consumer behavior with respect to income variations.

Answer 1

The Correct Option is C

Step 1: Understand the Engel curve.
The Engel curve shows how the quantity demanded of a good changes as income changes, holding other factors constant. It represents the relationship between a consumer's income and the amount of a good they demand.
Step 2: Analyze the options.
- Option (A) is incorrect because the Engel curve does not represent the relationship between the price of one good and the quantity demanded of the other.
- Option (B) is incorrect because the Engel curve does not show the relative price of goods but focuses on income and demand.
- Option (C) is correct because the Engel curve specifically relates income to the quantity demanded of one good.
- Option (D) is incorrect because the Engel curve does not show the ratio of quantities demanded but focuses on individual goods.
Final Answer: \[ \boxed{\text{income and quantity demanded of one of the goods}} \]