Question

An increase in the price of one product but not the other:

a) doesn't affect the budget line because income remains constant.

b) shifts the budget line parallel to the right.

c) changes the slope of the budget line.

d) shifts the budget line parallel to the left.

Answer 1

An increase in the price of one product but not the other, it (letter C) changes the slope of the budget line. A budget line is a representation of the goods that are affordable to one’s income. If there is an increase in the price of a product, then the budget line’s graphical representation will show either a steep slope or moderate changes.