... fish (you decide by how much). Their income goes up 10%. Assume both fish and beans are normal? We have to calculate the income that has increased first, and then plot the graph. So £100 X 10/100 = £110 which is the income now after the 10% increase. This then has to be applied to the fish and beans, so £110/£5 = 22 (fish) and beans are £100/£3 = 36.66 = 36. All this can be seen in Figure 2. Figure 2 shows as income increases prices remain constant. The position of the budget line will change; the higher the income, allows more goods to be bought. The increase in income leads to the shift of the curve from AB to CD on the diagram, a parallel movement. The effect will be that to open up the consumer the possibility of buying bundle of goods yielding more utility than was obtained before. ...

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