-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will
A) rotate the budget line to AD.
B) rotate the budget line to CD.
C) not move the budget line.
D) result in a parallel leftward shift of the budget line.

Question

-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will
A) rotate the budget line to AD. 
B) rotate the budget line to CD. 
C) not move the budget line. 
D) result in a parallel leftward shift of the budget line.

Quizplus · Accepted Answer

A rise in the price of a compact disc will make them more expensive relative to other goods, causing the budget line to rotate inward from the compact disc axis, moving from BD to AD.

-In the Figure Above, Suppose the Original Budget Line Is