In which way will an increase in income cause a consumer's budget constraint to change
A)It will shift outward, parallel to its initial position.
B)It will shift inward, parallel to its initial position.
C)It will pivot around the "Y" axis.
D)It will pivot around the "X" axis.

Question

Quizplus · Accepted Answer

An increase in income shifts the budget constraint outward, allowing consumers to buy more of both goods at every price level. This is because with a higher income, they can afford to buy more of both goods, and the budget constraint reflects the maximum amount they can spend. Therefore, the budget constraint will shift outward in a parallel manner to its initial position.

In Which Way Will an Increase in Income Cause a Consumer's