The diagram below shows a set of budget lines facing a household. FIGURE 6- 7
-Refer to Figure 6- 7. The movement of the budget line from ab to db could be caused by
A) a decrease in the price of housing.
B) a decrease in the price of food.
C) an increase in the price of housing.
D) an increase in the price of food.
E) a decrease in money income.

Question

The diagram below shows a set of budget lines facing a household.  FIGURE 6- 7
-Refer to Figure 6- 7. The movement of the budget line from ab to db could be caused by
A) a decrease in the price of housing. 
B) a decrease in the price of food. 
C) an increase in the price of housing. 
D) an increase in the price of food. 
E) a decrease in money income.

Quizplus · Accepted Answer

The movement of the budget line from ab to db represents a decrease in the quantity of housing that can be purchased at the same level of food consumption. This could be caused by an increase in the price of housing, which would make it more expensive and reduce the quantity that can be purchased with the same budget. Therefore, choice C is the best answer.

The Diagram Below Shows a Set of Budget Lines Facing