How does the budget line change, if the consumer's income increases to Rs. 40 but the prices remain unchanged ?

Open in App

Solution

If the consumer's income increases to Rs. 40, then she can buy more of both the goods (combination of goods). It will shift the budget line upward, to the right from AB to $A_{1}, B_{1}$ but the new budget line will be parallel to the old budget line as there is no change in the slope of the budget line.

Suggest Corrections

Similar questions

How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?

X_{1}

X_{2}

How does the budget line change if the price of good 2 decreases by a rupee but the price of good 1 and the consumer’s income remain unchanged?

Join BYJU'S Learning Program