Multiple Choice
Suppose the price of a pizza is R80, the price of a milk shake is R20, and the consumer's weekly income is R320. Suppose we have constructed the consumer's budget line with pizzas on the vertical axis and milk shakes on the horizontal axis. Given this information, if the consumer's income rises to R480, then what will happen to the consumer's budget line?
A) It move outwards so that it now intersects the vertical axis at 6 pizzas per week and the horizontal axis at 24 milk shakes per week.
B) It would not change.
C) It would move inwards so that it now intersects the vertical axis at 3 pizzas per week and the horizontal axis at 8 milk shakes per week.
D) It would rotate in a clockwise direction around the point at which it intersects the horizontal axis.
Correct Answer:
Verified
Correct Answer:
Verified
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