-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will
A) rotate the budget line to CD.
B) result in a parallel leftward shift of the budget line.
C) not move the budget line.
D) rotate the budget line to AD.

Question

-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will
A) rotate the budget line to CD. 
B) result in a parallel leftward shift of the budget line. 
C) not move the budget line. 
D) rotate the budget line to AD.

Quizplus · Accepted Answer

A rise in the price of a compact disc, assuming compact discs are represented on one of the axes, would change the slope of the budget line because the consumer can now afford fewer compact discs with the same budget. This results in a rotation of the budget line around the point on the axis representing the other good, which does not change in price.

-In the Figure Above, Suppose the Original Budget Line Is