Group of Visualisations
Budget Constraint
General Objective
The budget constraint is the restriction under which a consumer maximises his/her utility. In the case of two goods, it depicts alternative combinations of the quantity of good 1 and good 2 that the consumer can afford to purchase at given prices of those two goods as well as the consumer’s income.
In order to understand how individual demand for a specific good is derived, as well as how individual demand for a good changes due to changes in the prices of other goods and the consumer’s income, it is necessary to understand how a consumer’s budget constraint behaves when such changes occur. This is what this visualisation does. For the case of two goods, it shows how an individual consumer’s budget constraint reacts to changes in the values of the prices of the two goods as well as to changes in the consumer’s income.
Equation
The following equation is the only one that drives the visualisation in this group.
Budget Constraint
where is the consumer's budget, is the price of good 1, is the price of good 2, is the quantity of good 1, and is the quantity of good 2.
How to Use This Visualisation
The visualisation in this group offers the following modes of interaction.
The following values can be changed
Meaning of the icons
Refresh
Refresh the visualisation. It will reload with all its initial values as described below.
Select a Parameter or Variable
Select the parameter whose value you want to change (i.e. , or ).
Increase Value
Increase the value of the selected parameter, i.e. , or . By keeping the button pressed, the price will continue to increase incrementally.
Decrease Value
Decrease the value of the selected parameter, i.e. , or . By keeping the button pressed, the price will continue to decrease incrementally.
Change Value
Set the value of the selected parameter (i.e. , or ) by using a slider. This allows for faster changes than by using the plus and minus buttons.
Select a View
Choose between two different selections of coordinate systems.
Display Details
Display a brief description as well as the equations driving the visualisation.
Visibilities
Toggle the visibilities of the graphical elements described below.
Combinations of coordinate systems
Available Focuses
The visualisation offers two focuses:
1
Budget constraint
A single coordinate system showing the budget constraint. The effects of changes in the prices of both goods as well as the consumer's income are highlighted, and the visibility of the graphical elements representing the initial situation can be toggled.
2
Budget constraint with bar charts
This focus is similar to (1) above, but it adds bar charts representing both the initial and current values of the prices of both goods as well as the consumer's income.
Initial view, values and visibilities.
Initialisation
1Visualisation