Assume initially that the price of X (measured on the horizontal axis)is $9 and the price of Y (measured on the vertical axis)is $4.If the price of X now declines to $6,the budget line will:
A) be unaffected.
B) shift outward on the vertical axis.
C) shift inward on the horizontal axis.
D) shift outward on the horizontal axis.

Question

Quizplus · Accepted Answer

When the price of X declines from $9 to $6, the consumer can now purchase more units of X with the same income. This will cause the budget line to shift outward on the horizontal axis, allowing the consumer to purchase more units of both X and Y. Therefore, the correct answer is D - the budget line will shift outward on the horizontal axis.

Assume Initially That the Price of X (Measured on the Horizontal