When there is an increase in your budget, the budget constraint shifts out because you can afford:
A) more of the good on the vertical axis but not on the horizontal axis.
B) fewer units of both goods.
C) more units of both goods.
D) more of the good on the horizontal axis but not on the vertical axis.

Question

Quizplus · Accepted Answer

When there is an increase in your budget, the budget constraint shifts outward because you can afford more units of both goods. This is because the budget constraint represents all the combinations of goods and services that a consumer can afford with a given budget, so an increase in budget expands the consumer's purchasing power for all goods.

When There Is an Increase in Your Budget, the Budget