Alex's wage rate falls. Holding everything else constant, Alex's new time allocation budget line will:
A) shift in toward the origin, parallel to the old one.
B) shift away from the origin, parallel to the old one.
C) rotate to the left on the x-axis.
D) rotate down on the y-axis.

Question

Quizplus · Accepted Answer

When Alex's wage rate falls, the budget line rotates down on the y-axis because the maximum amount of goods that can be purchased with the wage decreases, while the time available remains constant.

Alex's Wage Rate Falls