Suppose the consumer's income increases while the prices of the goods remain constant.Then the
A)budget constraint shifts inward parallel to the original budget constraint.
B)budget constraint shifts outward parallel to the original budget constraint.
C)indifference curves shift outward away from the origin.
D)indifference curves become flatter.

Question

Quizplus · Accepted Answer

When the consumer's income increases while the prices of goods remain constant, the budget constraint shifts outward parallel to the original budget constraint. This is because the consumer now has more purchasing power, allowing them to purchase more of the goods they desire at the same prices as before. The indifference curves remain the same since there has been no change in the relative prices of goods.

Suppose the Consumer's Income Increases While the Prices of the Goods