U0

1
Figure 12.1 Utility maximisation subject to a
budget constraint.
Income,
C2
Y0
C/2
U0
Y0 P/1C1 C2
0
Y0/P/1
C/1
C1
2
Figure 12.2 The income and substitution effects
of a price reduction.
Income,
C2
U0
U1
Y0
C//2
b
a
C/2
d
0
C1
C/1
C1
C//1
Y0/P//1
Y0/P/1
3
Figure 12.4 Compensating variation and
equivalent variation.
H(U0)
H(U1)
a
P/1
f
b
P//1
d
Y
0
C////1
C///1
C/1
C//1
4
Figure 12.5(a) Compensating surplus .
C2
U1
U0
Y0
YN
b
a
f
E
e
0
E/
E//
d
5
C2
Figure 12.5(b) Equivalent surplus .
YN
U1
U0
Y0
h
a
b
g
f
0
E/
d
E//
E
6
Figure 12.6 Environmental quality as a commodity
demand function parameter
P1
PC1(En)
PC1(Eo)
A
b
a
PF1
H(P1, , PN, En , U0)
H(P1, , PN, Eo , U0)
0
C1
C/1
C//1
7
Figure 12.7 The linear trip-generating function
EVi
EVi
0
Pi
P
8
Figure 12.8 An illustrative surrogate demand
function