Given the graph below, if the consumer’s income decreases,
| a. The budget line will swing outward (slope will become shallower). |
| b. The budget line will swing inward (slope will become steeper). |
| c. The budget line will shift out parallel to the old budget line (the slope will be unchanged). |
| d. The budget line will shift inward parallel to the old budget line (the slope will be unchanged). |
| e. The indifference curves will change shape. |
Homework Answers
When the income of the consumer decrease, then the budget constraint shift inward parallel because only income has decreased but price remains same.
Budget constraint
M=P1Q1+P2Q2
Hence the Budget line will shift inward parallel due to decrease in the income of the consumers.
Hence option d is the correct answer.
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Given the graph below, if the consumer’s income decreases,
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If the consumer's income increases, a. The budget line will swing outward (slope will become shallower)....
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