If the consumer's income increases while the prices of both goods remain unchanged,what will happen to the budget line?
A) The budget line rotates inward from the intercept on the horizontal axis.
B) The budget line rotates outward from the intercept on the vertical axis.
C) The budget line shifts inward without a change in slope.
D) The budget line shifts outward without a change in slope.

Question

Quizplus · Accepted Answer

With an increase in income, the consumer can afford more of both goods. Thus, the budget line shifts outward without a change in slope. This is because the relative prices of the two goods have remained constant.

If the Consumer's Income Increases While the Prices of Both