Identify the statement that is false.
A) An increase in the amount of income changes the intercepts of the budget constraint but not the slope.
B) An increase in the price of good $x$ changes both the $x$-intercept and the slope of the budget constraint.
C) An increase in the price of good $x$ and an equal percentage increase in the price of good $y$ changes the $x$-intercept, the $y$-intercept, and the slope of the budget constraint.
D) An increase in the price of good $x$ and an increase in the price of good $y$ may or may not change the slope of the budget constraint.

Question

Quizplus · Accepted Answer

An increase in the price of good $x$ and an equal percentage increase in the price of good $y$ results in a parallel shift of the budget constraint, changing the intercepts and the slope. The statements in options A, B, and D are all true. An increase in the price of good $x$ and an equal percentage increase in the price of good $y$ changes the $x$-intercept, the $y$-intercept, and the slope of the budget constraint. This statement is false because an equal percentage increase in the prices of both goods does not change the intercepts of the budget constraint. Only the slope changes, becoming steeper.

Identify the Statement That Is False xxx Changes Both The xxx -Intercept and the Slope of the Budget Constraint

Identify the Statement That Is False $x$ Changes Both The $x$ -Intercept and the Slope of the Budget Constraint