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 price of the product increases, which means the consumer has to give up more of the other product to purchase the same amount of the taxed product. This results in a steeper budget line, which represents the new feasible consumption options for the consumer.

When a Product Depicted on the Horizontal Axis of a Typical