Suppose a family's budget line is such that the horizontal axis shows the amount of food consumed, while the vertical axis has the consumption of all other goods. Suppose this family receives Food Stamps. Then this will cause the budget line to:
A) pivot along the vertical axis
B) pivot along the horizontal axis
C) shifts right by the amount of food stamps, with the y-intercept a horizontal line at the original point
D) shift to the left

Question

Quizplus · Accepted Answer

If the family receives food stamps, it means they have additional income to spend on food. Therefore, their budget line shifts to the right by the amount of food stamps they receive. This creates a new slope that intersects the vertical axis at the original point, as the family's expenditure on all other goods remains the same. Therefore, the correct answer is C.

Suppose a Family's Budget Line Is Such That the Horizontal