The budget line can shift or rotate
A) only when income changes.
B) only when prices change.
C) when either income or prices change.
D) None of the above, because changes in income and prices do not shift or rotate the budget line.

Question

Quizplus · Accepted Answer

The budget line represents all the possible combinations of two goods that can be purchased within a given budget. Any change in income or price of either good will affect the slope and position of the budget line; thus, it can both shift or rotate. Therefore, choice C is correct.

The Budget Line Can Shift or Rotate