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Budget Line & Optimal Choice · Question 22 of 67

Question 22

MediumOriginal question

If the prices of both goods and the consumer's income all double, the budget line

Options for question 22

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. Intercepts: 2M ÷ 2P₁ = M ÷ P₁ and 2M ÷ 2P₂ = M ÷ P₂, unchanged.

  2. Slope: −2P₁ ÷ 2P₂ = −P₁ ÷ P₂, unchanged. The line stays where it was.

Concept
Equal proportional changes
Typical time
70 s
Your time
—
The rule this testsWhen income or prices change
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Ten questions from Budget Line & Optimal Choice, at your own pace.

Practise this chapter →

Ten questions from Budget Line & Optimal Choice, at your own pace.

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