With an increase in income,we can predict that a consumer will choose a new market basket
A) on a lower indifference curve.
B) on the same indifference curve but the new budget line.
C) on a higher indifference curve that passes through the new budget line.
D) on a higher indifference curve that is tangent to the new budget line

Question

Quizplus · Accepted Answer

An increase in income shifts the budget line outward, allowing consumers to reach higher indifference curves, which represent higher levels of satisfaction. The optimal choice is where the new budget line is tangent to a higher indifference curve, indicating the most preferred combination of goods that the consumer can now afford.

With an Increase in Income,we Can Predict That a Consumer