If the price of X falls,the budget constraint
A)shifts outward in a parallel fashion.
B)shifts inward in a parallel fashion.
C)rotates outward about the X-intercept.
D)rotates outward about the Y-intercept.

Question

Quizplus · Accepted Answer

When the price of good X falls, the consumer can afford more of good X for any given amount of good Y, causing the budget line to rotate outward about the Y-intercept. This is because the Y-intercept (representing the maximum amount of Y that can be purchased) remains unchanged, while the slope of the budget line (representing the price ratio of X to Y) becomes flatter.

If the Price of X Falls,the Budget Constraint