An increase in the price of one good will cause
A)An inward rotation of the budget curve
B)An outward rotation of the budget curve
C)A parallel shift in the budget curve
D)An inside shift of the budget curve

Question

Quizplus · Accepted Answer

When the price of one good increases, the consumer's purchasing power decreases, and they can afford lesser quantities of both goods. This leads to an inward rotation of the budget curve, indicating a decrease in the consumer's options.

An Increase in the Price of One Good Will Cause