What would happen to the budget line if the price of compact disks decreased and compact disks are measured on the vertical axis?
A)The budget line would shift to the left.
B)The budget line would rotate outward along the horizontal axis.
C)The budget line would rotate inward along the horizontal axis.
D)The budget line would rotate outward along the vertical axis.
E)The budget line would rotate inward along the vertical axis.

Question

Quizplus · Accepted Answer

When the price of compact disks decreases, the consumer can now afford more compact disks for the same amount of money. This means that the vertical intercept of the budget line will move upward (because the consumer can now afford more compact disks) while the horizontal intercept will remain the same (since the consumer's income has not changed). This will result in an outward rotation of the budget line along the vertical axis.

What Would Happen to the Budget Line If the Price