Engel Curve

An Engel Curve shows how a person's spending on a particular good or service changes as their income increases, while other factors stay the same. For example, as someone earns more, they might spend more on dining out or vacations. The curve helps illustrate whether demand for a good rises quickly or slowly with income, indicating if it's a luxury or a necessity. Typically, necessities have flatter curves, while luxuries show steeper ones, reflecting higher spending increases as income grows.