Asked by Shelby Bliss on May 27, 2024
Verified
Assume that a consumer purchases only two products and there is a decrease in the consumer's income. The prices of the two products stay constant. The decrease in income will result in
A) a shift of the budget line inward to the left.
B) a shift of the budget line outward to the right.
C) a decrease in the slope of the budget line.
D) an increase in the slope of the budget line.
Budget Line
A graphical representation of all possible combinations of two goods that an individual can afford given the prices of the goods and the individual's income.
Decrease In Income
A reduction in the amount of money earned or received by an individual or household.
Consumer Purchases
Transactions made by individuals or households for goods and services for personal use.
- Comprehend the impact of income and price changes on consumer choices and budget constraints.
Verified Answer
AT
Aye Thandar KhaingMay 31, 2024
Final Answer :
A
Explanation :
A decrease in income, with constant prices, reduces the quantity of goods a consumer can afford, shifting the budget line inward to the left.
Learning Objectives
- Comprehend the impact of income and price changes on consumer choices and budget constraints.