The figure above shows three budget lines.
-Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?
A) A rise in the price of water.
B) A fall in the price of water.
C) A rise in the price of water and the price of gum.
D) A decrease in the consumer's budget.
E) An increase in the consumer's budget.

Question

The figure above shows three budget lines.
-Based on the figure above,which of the following would lead the consumer's budget line to shift from BL₀ to BL₁?
A) A rise in the price of water. 
B) A fall in the price of water. 
C) A rise in the price of water and the price of gum. 
D) A decrease in the consumer's budget. 
E) An increase in the consumer's budget.

Quizplus · Accepted Answer

An increase in the consumer's budget would shift the budget line outward from BL₀ to BL₁, allowing the consumer to purchase more of both goods.

The Figure Above Shows Three Budget Lines