Question 27
MediumOriginal questionRead the two statements and choose the correct option.
I. A rise in income makes the budget set larger.
II. A rise in the price of either good makes the budget set smaller.
Show the answer and explanation
CorrectNot quiteAnswer C
Correct answer: C
Explanation
Higher income pushes the line out, adding bundles: I is true.
A higher price pulls one intercept in, removing bundles: II is true.
- Concept
- Size of the budget set
- Typical timeTypical
- 70 s
- Your timeYours
- —
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