If the price of goods X and Y change proportionally,then which of the following is true?
A) The budget line will not change because the prices have changed proportionally.
B) It is not clear what happens to the budget line because too many factors have changed.
C) It will appear as if the budget line has shifted even though income has not changed.
D) It will appear as if the budget line pivoted and the slope will change because prices changed.

Question

Quizplus · Accepted Answer

When prices of goods change proportionally, the budget line shifts parallel to the original line, indicating a change in the purchasing power, even though income remains constant.

If the Price of Goods X and Y Change Proportionally,then