From the graph below, answer the following questions.
Consumption curve starts from above origin. Why?
Answer & explanation
Correct answer: option 2
The correct answer is option 2: Some consumption is required for survival even at zero income
The consumption curve does not start from the origin because at zero level of income, the consumption is not zero. There is certain minimum consumption in order to survive, i.e. autonomous consumption (OC). This also means that saving at zero level of income will be negative (OS).