Assertion (A): A fall in the price of good 1 shifts the budget line outward, parallel to itself.
Reason (R): A fall in P₁ raises the most of good 1 the consumer can buy.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer D

Correct answer: D

A is false: only the good-1 intercept moves, so the line rotates; it does not shift in parallel.
R is true: M ÷ P₁ rises.

Concept: Rotation, not a parallel shift
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsWhen income or prices change

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

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

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Assertion (A): A fall in the price of good 1 shifts the budget line outward, parallel to itself.Reason (R): A fall in P₁ raises the most of good 1 the consumer can buy.

Explanation

Assertion (A): A fall in the price of good 1 shifts the budget line outward, parallel to itself.
Reason (R): A fall in P₁ raises the most of good 1 the consumer can buy.