A decrease in the price of a good or service
A)causes the budget line to rotate inward
B)causes a parallel outward shift of the budget line
C)means that less of the good can be purchased with a given income
D)causes the budget line to rotate outward
E)causes a parallel inward shift of the budget line

Question

Quizplus · Accepted Answer

A decrease in the price of a good or service causes the budget line to rotate outward, as now more of the good can be purchased with the given income. This means that the consumer can now afford more of the good or service than before without sacrificing consumption of other goods.

A Decrease in the Price of a Good or Service