Question

Suppose you have drawn a​ consumer's budget line for food and clothing with food on the horizontal axis and clothing on the vertical axis. If the prices of food and clothing remain the same and the​ consumer's income​ increases, A. the budget line becomes steeper. B. the budget line shifts outward in a parallel fashion. C. the budget line becomes flatter. D. the budget line shifts inward in a parallel fashion.

Answer 1

The correct answer is option B.

Step-by-step explanation:

A budget line is drawn to show the different combinations or bundles of food and clothing that a consumer will be able to afford given his current income. The quantity of food is shown on the horizontal axis. While the vertical axis represents clothing.

If the price of both the goods remains constant and the income of the consumer remains constant, the consumer will be able to afford more quantity of both the goods. This will lead to an increase in the quantity demanded of both commodities. As a result, the budget line will shift outwards.