A budget line will shift outward and not change its slope if
A) there is an increase in the consumer's budget.
B) the consumer's preferences change.
C) the price of one good changes.
D) the price of both goods increase by the same percentage.
E) None of the above shift the budget line outward.

Question

Quizplus · Accepted Answer

An increase in the consumer's budget will shift the budget line outward because the consumer can now afford more total goods and services. The slope of the budget line remains the same because the relative price of the two goods remains unchanged. Choices B, C, and D would cause the budget line to shift, but not necessarily outward, and/or change its slope. Choice E is incorrect since an increase in the consumer's budget will always shift the budget line outward, as long as prices and preferences remain constant.

A Budget Line Will Shift Outward and Not Change Its