Question 23
MediumOriginal questionIf the price of good 2 (on the vertical axis) rises while income and P₁ stay the same, the budget line
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
M ÷ P₂ falls, so the good-2 intercept moves down.
M ÷ P₁ is unchanged, so the line pivots on the good-1 axis and becomes flatter.
- Concept
- Rise in the price of good 2
- Typical timeTypical
- 70 s
- Your timeYours
- —
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