Assertion (A): A 10% rise in income with a 10% rise in both prices leaves the budget set unchanged.
Reason (R): The budget line depends only on M ÷ P₁ and M ÷ P₂.

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 A

Correct answer: A

Both are true, and R explains A: equal percentage rises leave both ratios, and so both intercepts, unchanged.

Concept: Proportional changes
Typical timeTypical: 100 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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Assertion (A): A 10% rise in income with a 10% rise in both prices leaves the budget set unchanged.Reason (R): The budget line depends only on M ÷ P₁ and M ÷ P₂.

Explanation

Assertion (A): A 10% rise in income with a 10% rise in both prices leaves the budget set unchanged.
Reason (R): The budget line depends only on M ÷ P₁ and M ÷ P₂.