CBSE 2017 Class 12 Economics Outside Delhi Set-1

© examsnet.com
Question : 18
Total: 18
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= Consumption function
OI=45 degree line showing income drawn from the origin O.
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 B on consumption curve and from it draw a perpendicular on X-axis intersecting it on point B1.
(ii) Take OS on Y-axis of lower part as equal to OC(OS=OC). This gives point S from where saving curve will start.
(iii)Join points S and B1 and extend the straight line upward and thus we get saving curve SS1.
In this way, saving curve is diagrammatically drawn from consumption curve.
© examsnet.com
Go to Question: