The diagram below shows a set of budget lines facing a household. FIGURE 6-8
-Refer to Figure 6-8.The movement of the budget line from ab to ef could be caused by
A)a decrease in money income.
B)a decrease in the price of either food or housing.
C)an equal percentage decrease in the price of both food and housing.
D)an equal percentage increase in the price of both food and housing.
E)an increase in the price of either food or housing.

Question

The diagram below shows a set of budget lines facing a household.  FIGURE 6-8
-Refer to Figure 6-8.The movement of the budget line from ab to ef could be caused by
A)a decrease in money income. 
B)a decrease in the price of either food or housing. 
C)an equal percentage decrease in the price of both food and housing. 
D)an equal percentage increase in the price of both food and housing. 
E)an increase in the price of either food or housing.

Quizplus · Accepted Answer

An equal percentage decrease in the price of both food and housing would cause the budget line to shift outward from ab to ef, indicating that the consumer can now afford more of both goods with the same income.

The Diagram Below Shows a Set of Budget Lines Facing