Suppose a consumer only purchases food and clothing, and food is plotted along the horizontal axis of the consumer's indifference map. If the price of clothing increases and the price of food and income do not change, then the budget line changes by rotating:
A) counter-clockwise about the fixed vertical axis intercept.
B) clockwise about the fixed vertical axis intercept.
C) counter-clockwise about the fixed horizontal axis intercept.
D) clockwise about the fixed horizontal axis intercept.
E) none of the above

Question

Quizplus · Accepted Answer

The budget line rotates counter-clockwise about the fixed horizontal axis intercept because the price of clothing (plotted on the vertical axis) increases, reducing the amount of clothing that can be purchased for a given amount of food (which remains unchanged in price), without changing the maximum amount of food that can be purchased.

Suppose a Consumer Only Purchases Food and Clothing, and Food