What happens to the budget line when consumer income increases but the price of goods remains unchanged?

Parallel upwards shift

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

Parallel downwards shift

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Shift only on the x axis

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Shift only on the y-axis

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A Parallel upwards shift
Greater the income with same prices would mean that the consumer can purchase more of both the goods on the budget line.

Suggest Corrections

Similar questions

A consumer consumes only two goods. If the price of one of the goods falls, what happens to the indifference curve?

a. Shifts upwards

b. Shifts downwards

c. Can shift both upwards or downwards

d. Does not shift

Q. What happens when the consumer income increases but the price of the goods remains unchanged?

Q. What happens when the price of good 1 increases but the income and price of good 2 remains the same?

A consumer consumes only two goods. For the consumer to be in equilibrium why must marginal rate of substitution be equal to the ratio of prices of the two goods? Explain.

A consumer consumes only two goods. Why is the consumer in equilibrium when he buys only that combination of the two goods that is shown at the point of tangency of the budget line with an indifference curve? Explain.

Explain when a consumer, consuming only two commodities X and Y, attains equilibrium under the utility approach.

Q. Increase in income of the consumer is the only cause that leads to a parallel shift of budget line to the right. State True or False.

Join BYJU'S Learning Program

What happens to the budget line when consumer income increases but the price of goods remains unchanged?

The correct option is A Parallel upwards shiftGreater the income with same prices would mean that the consumer can purchase more of both the goods on the budget line.

The correct option is A Parallel upwards shift
Greater the income with same prices would mean that the consumer can purchase more of both the goods on the budget line.