Suppose a consumer purchases two goods, and, and that the price of doubles, the consumer's income doubles, and the price of remains unchanged. If good is plotted on the horizontal axis, the budget line:
A)will remain unchanged.
B)will become steeper.
C)will become flatter.
D)will shift out from the origin parallel to the original budget line.

Question

Quizplus · Accepted Answer

When the price of the good on the horizontal axis doubles, it becomes relatively more expensive compared to the other good, causing the budget line to become steeper. Doubling the consumer's income while keeping the price of the other good constant does not affect the slope of the budget line, which is determined by the relative prices of the two goods.

Suppose a Consumer Purchases Two Goods, And, and That the Price