If an individual's income increases,
A) the person's budget line shifts outward in a parallel manner.
B) the person's indifference curves shift outward in a parallel manner.
C) there will be no impact on the individual's budget line or indifference curves.
D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

When an individual's income increases, their budget line shifts outward in a parallel manner because they can now afford more of both goods, assuming prices remain constant. Indifference curves, which represent levels of utility, do not shift due to changes in income; instead, the individual moves to a higher indifference curve.

If an Individual's Income Increases