Edith is buying products X and Y with her money income.Suppose her budget line shifts rightward (outward).This might be the result of:
A) the prices of X and Y increasing while her money income remains constant.
B) her money income decreasing while the prices of X and Y remain constant.
C) her money income increasing more than proportionately to increases in the prices of X and Y.
D) none of these.

Question

Quizplus · Accepted Answer

When Edith's budget line shifts rightward (outward), this means she can now afford more of both products X and Y. This can happen if her money income increases more than proportionately to increases in the prices of X and Y. So option C is the best choice. Option A would result in a leftward (inward) shift of the budget line, and option B would result in a parallel shift leftward (inward) shift of the budget line.

Edith Is Buying Products X and Y with Her Money