-Refer to Exhibit 4-3. The budget line rotates from BB' to BB" because the price of good 1
A) increases
B) decreases
C) remains constant

Question

-Refer to Exhibit 4-3. The budget line rotates from BB' to BB" because the price of good 1
A) increases 
B) decreases 
C) remains constant

Quizplus · Accepted Answer

When the budget line rotates inward from BB' to BB", it indicates that the price of good 1 has increased, making it more expensive relative to good 2 and thus reducing the quantity of good 1 that can be purchased with a given budget.