What would happen to the budget line if income increases by the same percentage as the price of the two goods decreases (that is income up by, say, 10 percent and the prices down by 10 percent)?

Question

Quizplus · Accepted Answer

If income increases by the same percentage as the price of the two goods decreases, then the relative prices and therefore the slope of the budget line remain the same. Thus, the budget line will not shift or pivot, and it will remain unchanged.

What Would Happen to the Budget Line If Income Increases