When a budget constraint shifts outward
A)it could only have been caused by in increase in income.
B)the consumer is indifferent to goods X and Y.
C)it could only have been caused by an increase in the price of one of the goods.
D)the consumer can reach a higher indifference curve.

Question

Quizplus · Accepted Answer

When a budget constraint shifts outward, it means that the consumer can afford more goods and services than before. This could be due to an increase in income or a decrease in prices. As a result, the consumer can now reach a higher indifference curve, indicating that they can now afford higher quantities of both goods X and Y, and are better off than before.

When a Budget Constraint Shifts Outward