When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed
A)The budget line becomes steeper
B)The budget line becomes flatter
C)The indifference curve of the consumer shifts right
D)All the indifference curves of the consumer become steeper

Question

Quizplus · Accepted Answer

When a product depicted on the horizontal axis of a typical indifference curve model of behavior is taxed, the relative price of that product increases, causing the budget line to become steeper. This is because the consumer now needs to give up more of the other good to consume the same amount of the taxed good. The indifference curves would not necessarily shift or change in response to a tax on one of the goods in the model.

When a Product Depicted on the Horizontal Axis of a Typical