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:

Direct Cost

A cost that can be easily and conveniently traced to a specified cost object.

Packaging

The process and materials used to protect, transport, and present goods for sale.

Leasing A Machine

Leasing a machine entails entering into a rental agreement to use a piece of equipment for a specified period in exchange for regular payments, without purchasing it outright.

Product Cost

The total expenses incurred to produce a product, including direct materials, direct labor, and manufacturing overhead, used to determine the cost of goods sold.