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Question -

What do you understand by ‘para¬metric shift of a line’? How does a line shift when its (i) slope increases and (ii) its intercept increases?



Answer -


when b increases from 0.5 to 0.75, then consumption curve (which is a straight line) pivots upwards. This is called a parametric shift of a graph. It is shown in figure.
(ii)When C increases: It is the autonomous part of the consumption function. It graphically gives the intercept of the consumption curve. If increases from 2 to 5, there will be parallel upward shift in the consumption curves. It is shown in figure given.
               
Thus, when slope changes, there is parametric shift in the curve. When intercept changes, there is parallel shift in the curve.

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