will always exist one indifference curve that touches the budget line at a single point of tangency. All higher

indifference curves, like Uh, will be completely above the budget line and, although the choices on that

indifference curve would provide higher utility, they are not affordable given the budget set. All lower

indifference curves, like Ul, will cross the budget line in two separate places. When one indifference curve

crosses the budget line in two places, however, there will be another, higher, attainable indifference curve

sitting above it that touches the budget line at only one point of tangency.

Changes in Income

A rise in income causes the budget constraint to shift to the right. In graphical terms, the new budget

constraint will now be tangent to a higher indifference curve, representing a higher level of utility. A reduction

in income will cause the budget constraint to shift to the left, which will cause it to be tangent to a lower
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