Income Offer Curve In Basic Microeconomics Can anybody explain to me the income offer curve? Is it a relationship between $x_1$ and $m$? If the budget equation is $p_1x_1+p_2x_2=m$? With income being the variable $m$?
It is the change in the demand of $x_1$ and $x_2$ for different levels of income $m$ (when we shift the budget curve out). Intuitively, how will your consumption of the two goods change when income changes. If we let $x_1$ be bus tickets and $x_2$ taxi rides, then if your income increases, we might expect that you will takes the bus less and the taxi more often.