Suppose there are two goods (X and Y).On a traditional graph of a budget line a tripling of all prices and incomes will
A)alter the slope of the budget line only.
B)alter the slope of the budget line as well as the Y-intercept.
C)alter the slope of the budget line as well as the X-intercept.
D)leave the budget line unaltered.

Question

Quizplus · Accepted Answer

A tripling of all prices and incomes will leave the relative prices and income unchanged, and therefore will not alter the slope or intercepts of the budget line. The budget line will shift outward in parallel fashion without rotating or changing shape.

Suppose There Are Two Goods (X and Y)