As the Price of Good X Increases,the Budget Line

question 37

Multiple Choice

As the price of good X increases,the budget line

• A) makes a parallel shift outward.
• B) makes a parallel shift inward.
• C) pivots inward.
• D) pivots outward.

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Definitions:

Retaining Earnings

Profits that a company has decided to keep or reinvest in itself rather than pay out as dividends to its shareholders.

Cost of Debt

The effective rate that a company pays on its total debt, reflecting the expense of borrowing funds.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted, including equity, debt, preferred stock, and any other long-term debt.

Debt Financed

The use of borrowed funds to purchase assets or fund operations, typically involving interest payments to the lender.