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Figure and Table: The Budget Line
-(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of clams would rotate the budget line along the _____ axis _____ the origin.
A) An increase; horizontal; away from
B) A decrease; horizontal; away from
C) An increase; vertical; toward
D) A decrease; vertical; away from

Question

Use the following to answer questions 
Figure and Table: The Budget Line  
-(Figure and Table: The Budget Line) Look at the figure and table The Budget Line. _____ in the price of clams would rotate the budget line along the _____ axis _____ the origin.
A) An increase; horizontal; away from 
B) A decrease; horizontal; away from 
C) An increase; vertical; toward 
D) A decrease; vertical; away from

Quizplus · Accepted Answer

According to the table, clams are on the y-axis and coffee is on the x-axis. Therefore, a change in the price of clams would affect the y-intercept of the budget line. An increase in the price of clams would decrease the maximum quantity of clams that can be bought with the fixed income, thereby lowering the y-intercept of the budget line. As a result, the budget line would rotate along the horizontal axis away from the origin.

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