An increase in the price of one good would cause a budget line to ____ while an increase in the budget would cause a budget line to _____.
A) pivot inward; shift parallel outward
B) pivot outward; shift parallel outward
C) pivot inward; shift parallel inward
D) pivot outward; shift parallel inward

Question

Quizplus · Accepted Answer

An increase in the price of one good causes the budget line to pivot inward because the consumer can now afford less of that good for the same amount of money. An increase in the budget causes the budget line to shift parallel outward because the consumer can now afford more of both goods with the increased budget.

An Increase in the Price of One Good Would Cause