A change in input prices will change the location of the budget line.

Question

Quizplus · Accepted Answer

Input prices refer to the prices of the resources used to produce goods or services. If the price of one or more inputs changes, it will affect the production cost of the goods or services, which in turn affects the price of the product. As a result, the slope of the budget line changes, and the new line will be steeper or flatter depending on the change in input prices. Therefore, a change in input prices will result in a new budget line with a different slope and location.

A Change in Input Prices Will Change the Location of the Budget