A consumer's budget line will shift to the right in a parallel manner if:
A) the price of the good on the X-axis decreases.
B) the price of the good on the Y-axis increases.
C) the consumer's income increases.
D) the consumer's income decreases.

Question

Quizplus · Accepted Answer

A consumer's budget line shows all the combinations of two goods that the consumer can purchase given his/her income and the prices of the goods. An increase in income will shift the budget line to the right in a parallel manner, indicating that the consumer can now afford to buy more of both goods at their given prices. A decrease in income would shift the budget line to the left. Changes in the prices of the goods would cause rotation along the budget line, not a parallel shift.

A Consumer's Budget Line Will Shift to the Right in a Parallel