Use the figure below to answer the following questions. Figure 9.3.3
-Consider an initial budget line labelled RT in Figure 9.3.3.What would rotate the budget line to RS?
A)a rise in the price of good X
B)a fall in the price of good X
C)a rise in the price of good Y
D)a decrease in the preference for good X
E)an increase in real income

Question

Use the figure below to answer the following questions.  Figure 9.3.3
-Consider an initial budget line labelled RT in Figure 9.3.3.What would rotate the budget line to RS?
A)a rise in the price of good X 
B)a fall in the price of good X 
C)a rise in the price of good Y 
D)a decrease in the preference for good X 
E)an increase in real income

Quizplus · Accepted Answer

A fall in the price of good X would increase the purchasing power for good X and allow for a greater consumption of it relative to good Y. This would result in a new budget line RS that is tangent to a higher indifference curve, representing a higher level of utility for the consumer.

Use the Figure Below to Answer the Following Questions