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CBSE 2017 Class 12 Economics Outside Delhi Set-1

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Question : 18 of 18
Marks: +1, -0
Given a consumption curve, outline the steps required to be taken in deriving a saving curve from it. Use diagram.
Solution:  
In the above diagram :
CC=CC= Consumption function
OI=45∘OI=45^{\circ} degree line showing income drawn from the origin OO.
B=B= Breakeven point where consumption = income, i.e, a point where there is no saving.
Following are the steps used in drawing saving curve from consumption function :
(i) Take a point BB on consumption curve and from it draw a perpendicular on XX-axis intersecting it on point B1B_1.
(ii) Take OS on YY-axis of lower part as equal to OC(OS=OC)\mathrm{O C(O S=O C)}. This gives point SS from where saving curve will start.
(iii)Join points SS and B1B_1 and extend the straight line upward and thus we get saving curve SS1SS_1.
In this way, saving curve is diagrammatically drawn from consumption curve.
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