Which of the following describes what happens to a consumer's budget line if that consumer's budget increases?
A) The budget line becomes steeper.
B) The budget line becomes more horizontal.
C) The budget line shifts farther away from the origin of the graph.
D) The budget line shifts closer to the origin of the graph.
E) The budget line does not change.

Question

Quizplus · Accepted Answer

A consumer's budget line shows the various combinations of two goods that the consumer can purchase given his or her income and the prices of the goods. If the consumer's budget increases, for example, by receiving a raise or a gift of money, the consumer can purchase more of both goods. As a result, the budget line shifts farther away from the origin, indicating a higher level of consumption for both goods. The slope of the budget line depends on the prices of the goods and the ratio of the prices. It does not change based solely on the consumer's budget.

Which of the Following Describes What Happens to a Consumer's