The Following Diagram Shows Two Budget Lines: a and B

question 169

Multiple Choice

The following diagram shows two budget lines: A and B.
Which of the following could explain the change in the budget line from A to B?

• A) a decrease in the price of X
• B) an increase in the price of Y
• C) a decrease in the price of Y
• D) More than one of the above could explain this change.

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Definitions:

Labor Costs

Expenses associated with employing labor, including wages, salaries, benefits, and taxes.

World Price

The international market price of a good, influenced by global supply and demand conditions.

Merchandise Trade

International trade in goods as opposed to services, including both exports and imports of physical products.

Tangible Products

Physical items that can be touched, seen, and measured, such as electronics, clothing, and furniture.