If the Price of One Good Increases While the Price

question 107

Multiple Choice

If the price of one good increases while the price of the other good and the consumer's income remain unchanged,what will happen to the budget line?

• A) The budget line rotates inward from the intercept on the axis of the good that did not change in price.
• B) The budget line rotates outward from the intercept on the axis of the good that did not change in price.
• C) The budget line shifts inward without a change in slope.
• D) The budget line shifts outward without a change in slope.

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Definitions:

Intuition

A rapid, effortless process of knowing or understanding something without the use of rational processes.

Statistical Probability

A measure of the likelihood of a specific event or outcome occurring, based on quantitative data and mathematical calculations.

Predictive Accuracy

The ability of a model or method to correctly forecast the outcome of unknown data points or future events.

Coin Tosses

A simple random experiment involving the flipping of a coin to decide between two possibilities, often used to demonstrate basic probability or make unbiased decisions.