Final answer:
A model that describes changes in the quantity of goods purchased at different levels of income is called the income-consumption curve or Engel curve. It explains the relationship between income levels and consumption patterns, distinguishing between normal goods and inferior goods. Changes in price are also important as they affect the quantity demanded of goods according to the law of demand.
Step-by-step explanation:
The model that describes how the quantity of a good purchased by consumers changes at various levels of income is known as the income-consumption curve or Engel curve. This model helps in understanding how changes in income affect consumer choices for different goods. For instance, if the income increases, the consumption of certain goods, referred to as normal goods, is likely to increase, while the demand for inferior goods may decrease because consumers can now afford the more expensive and preferable choices.
In the context of price changes, if there is a rise in price of a good, it usually leads to a decrease in the quantity demanded of that good, which is demonstrated by the law of demand. For example, if the price of baseball bats goes up, consumers like Sergei might buy fewer bats. This is because the higher price impacts Sergei's budget constraint, and he has to reconsider his total utility and marginal utility based on the new prices.