Question

Assume initially that the price of X (the quantity of which is measured on the horizontal axis) is $9 and the price of Y (the quantity of which is measured on the vertical axis) is $4. If the price of X now declines to $6, the budget line will Multiple Choice be unaffected. shift outward on the vertical axis. shift inward on the horizontal axis. shift outward on the horizontal axis.

Answer 1

The budget line will shift outward on the horizontal axis.

Step-by-step explanation:

One of the laws of the demand is that the lower the price of a good, the higher the quantity of that good that is purchased.

From the question, a decline in the price of X from $9 to $6, will lead to an increase in the quantity of X that is bought.

Since the price of Y still remains at $4, if the price of X now declines to $6, the budget line will shift outward on the horizontal axis.