When the price of a good increases, the budget constraint shifts in parallel to the original budget constraint.

Name: When the price of a good increases, the budget constraint shifts in parallel to the original budget constraint.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When the price of a good increases, the budget constraint rotates inward around the axis of the other good, not shifting in parallel, because the consumer can now afford less of the good that has become more expensive relative to the other good.

When the Price of a Good Increases, the Budget Constraint