What Would Happen to the Budget Line If Income as Well

question 225

Multiple Choice

What would happen to the budget line if income as well as prices of both goods increase by the same percentage?

• A)A rightward parallel shift in the budget line
• B)A leftward parallel shift in the budget line
• C)A rightward shift in the budget line
• D)No shift in the budget line

---

Definitions:

Price Maker

A market participant with the power to influence the price of a good or service by controlling its supply, its demand, or both.

Perfect Competition

A market structure characterized by many buyers and sellers, where all firms sell identical products and no single buyer or seller can influence the market price.

Identical Goods

Products that are exactly the same in every aspect, leading consumers to have no preference for one product over another based on characteristics, brand, or quality.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taking behavior.