If the price of the good measured on the horizontal axis is subject to volume discounts,then:
A) the budget line will get steeper as the consumer moves along it from left to right.
B) the budget line will get flatter as the consumer moves along it from left to right.
C) the indifference curve will get steeper as the consumer moves along it from left to right.
D) the indifference curve will get flatter as the consumer moves along it from left to right.

Question

Quizplus · Accepted Answer

When the price of the good is subject to volume discounts, the unit price decreases with an increase in quantity purchased. This means that as the consumer purchases more of the good, their budget constraint expands, resulting in a flatter budget line. This also means that the consumer can afford more of both goods at a lower price, resulting in a higher level of utility for a given level of income, and hence steeper indifference curves. Therefore, the budget line will get flatter, and the indifference curve will get steeper as the consumer moves along it from left to right.

If the Price of the Good Measured on the Horizontal