A budget line will shift outward and not change its slope if
A) the consumer's preferences change.
B) there is an increase in the consumer's budget.
C) the price of one good changes.
D) the price of both goods increase by the same percentage.
E) None of the above shift the budget line outward.

Question

Quizplus · Accepted Answer

An increase in the consumer's budget will shift the budget line outward, as the consumer can now afford more of both goods without changing the relative prices. A change in preferences or a change in the price of one or both goods would cause the budget line to rotate or pivot, while an equal percentage increase in the price of both goods would cause the budget line to shift inward. Therefore, only choice B fits the criteria of shifting the budget line outward without changing its slope.

A Budget Line Will Shift Outward and Not Change Its