See Demand

We will keep this person’s income at $600 weekly and look at changes in the consumer’s equilibrium as the price of asparagus varies. This permits us to extract the information necessary to graph a demand curve for asparagus.

 

Panel A of Figure 9 superimposes a set of indifference curves on the budget lines from Figure 6 for a person with $600 weekly income who faces various possible monetary prices for asparagus. We have connected the equilibria for these different prices of asparagus with a price–consumption curve. Each point on this curve corresponds to a different price for asparagus on the corresponding $600 budget line. At these points of tangency, indifference curves reflect consumer preferences, while budget lines reflect income constraints. Each tangency point represents maximum satisfaction given the constraints of this consumer’s income and the relative market prices of the two goods. We can find the quantity of asparagus associated with each price by dropping a line from the price–consumption line to the horizontal (asparagus) axis. Voilà! We have the information needed to build a demand schedule and draw a demand curve, as in Panel B of Figure 9. Points a through e in the two panels correspond.