-In the figure above, a decrease in the price of a bag of potato chips would result in the budget line
A) becoming steeper.
B) becoming flatter.
C) making a parallel shift toward point a.
D) making a parallel shift toward point c.

Question

-In the figure above, a decrease in the price of a bag of potato chips would result in the budget line
A) becoming steeper. 
B) becoming flatter. 
C) making a parallel shift toward point a. 
D) making a parallel shift toward point c.

Quizplus · Accepted Answer

A decrease in the price of a bag of potato chips, assuming it is one of the goods represented on the axes, would make it possible to purchase more bags of chips for the same amount of money. This would cause the budget line to rotate outward, becoming flatter, as the relative price of potato chips decreases compared to the other good.

-In the Figure Above, a Decrease in the Price of a Bag