If income increases and prices are unchanged, the consumer's budget constraint
A)remains the same.
B)shifts outward.
C)shifts inward.
D)rotates outward along the horizontal axis.

Question

Quizplus · Accepted Answer

An increase in income will shift the budget constraint curve outward, allowing the consumer to purchase more goods and services at the same prices as before. This is due to the fact that the consumer has a larger budget to work with, which in turn increases their purchasing power.

If Income Increases and Prices Are Unchanged, the Consumer's Budget