An increase in the price of good X will have what effect on the budget line on a normal X-Y graph?
A)Parallel outward shift of the line.
B)Increase the vertical intercept.
C)Decrease the horizontal intercept.
D)Parallel inward shift of the line.

Question

Quizplus · Accepted Answer

An increase in the price of good X will decrease the amount of X that can be purchased with the same income, causing the horizontal intercept (the quantity of X when Y is zero) to decrease. This results in a leftward shift of the budget line, making it steeper.

An Increase in the Price of Good X Will Have