An increase in the price of good X will have what effect on the budget line on a normal X-Y graph?
A) A parallel outward shift of the line
B) An increase in the vertical intercept
C) A decrease in the horizontal intercept
D) A parallel inward shift of the line

Question

Quizplus · Accepted Answer

An increase in the price of good X makes it more expensive relative to good Y, reducing the quantity of X that can be purchased with a given budget. This is represented by a decrease in the horizontal intercept on a budget line graph, where the horizontal axis typically represents the quantity of good X.

An Increase in the Price of Good X Will Have