A consumer's budget line will rotate outward along the vertical axis if:
A) the price of the good on the horizontal axis decreases.
B) the price of the good on the vertical axis increases.
C) the price of the good on the horizontal axis increases.
D) the price of the good on the vertical axis decreases.

Question

Quizplus · Accepted Answer

The budget line represents all the possible combinations of two goods that a consumer can purchase with their given income. The slope of the budget line is determined by the relative prices of the two goods. When the price of the good on the vertical axis decreases, the consumer can now afford more of that good, thus the budget line rotates outward along the vertical axis to reflect this increased purchasing power.

A Consumer's Budget Line Will Rotate Outward Along the Vertical