-Refer to the figure above.If the relative price of S were to increase,then the price line would
A)shift out in a parallel fashion.
B)shift in in a parallel fashion.
C)become steeper.
D)become flatter.

Question

-Refer to the figure above.If the relative price of S were to increase,then the price line would
A)shift out in a parallel fashion. 
B)shift in in a parallel fashion. 
C)become steeper. 
D)become flatter.

Quizplus · Accepted Answer

When the relative price of good S increases, it means that S becomes more expensive in comparison to the other good (let's say T). This change causes the budget line to rotate inward around the intercept of the other good (T), making the slope steeper because you can now buy less of S for each unit of T.

-Refer to the Figure Above