When a consumer's income rises and prices remain unchanged, the budget line usually:
Correct answer: B. Shifts outward parallel to itself
- A. Rotates inward around one intercept
- B. Shifts outward parallel to itself
- C. Becomes vertical at the original income
- D. Shifts inward parallel to itself
Explanation
Higher income enables the consumer to buy more of both goods at unchanged prices. Therefore, the budget line shifts outward without changing its slope.
Last updated
About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
Practise Microeconomics
38 free Microeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Economics questions like this
Economics is on this paper prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for it.
Related questions
A factory imposes pollution costs on nearby residents that are not included in its private production costs. At the efficient output, which condition is expected?
A firm has fixed cost of Rs. 100 and variable cost of Rs. 300 when it produces 20 units. What is its average total cost?
A firm in a perfectly competitive market faces a horizontal demand curve mainly because it:
A firm's economic profit is zero when its total revenue is equal to its:
A monopolist can successfully practise price discrimination only when it can: