Figure 3.2.3
-Refer to Figure 3.2.3 above. The rotation of the budget line could have been caused by:
A) an increase in income.
B) an increase in the price of food.
C) a decrease in the price of food.
D) an increase in the preference for food.

Question

Figure 3.2.3
-Refer to Figure 3.2.3 above. The rotation of the budget line could have been caused by:
A) an increase in income. 
B) an increase in the price of food. 
C) a decrease in the price of food. 
D) an increase in the preference for food.

Quizplus · Accepted Answer

A rotation of the budget line occurs when there is a change in one of the prices. In this case, the price of food decreases, causing the budget line to rotate outward. Therefore, choice C is the correct option. The other options do not explain the observed rotation of the budget line.

Figure 3.2.3 -Refer to Figure 3.2.3 Above. the Rotation of the Budget