Question

An increase in a consumer's income Group of answer choices increases the slope of the consumer's budget line. has no effect on the slope of the consumer's budget line. decreases the slope of the consumer's budget line. has no effect on the consumer's budget line.

Answer 1

An increase in a consumer's income will increase the slope of the consumer's budget line.

What is a budget line?

• The budget line sometimes referred to as the budget restriction, displays every combination of two commodities that a client is able to afford at the current market pricing and within their specific income range.
• The budget line is a graphical representation of every combination of the two commodities that may be purchased using the given income and cost, with the price of each combination being equal to the customer's monetary earnings.
• It's critical to remember that the slope of the budget line corresponds to the cost-to-volume ratio of two commodities.
• The slope of the budgetary restriction is very significant.

Increase in the slope of the budget line:

• A rise in income allows consumers to purchase more of both goods, which causes the budget line to shift outward, or to the right (slope increases).

Therefore, an increase in a consumer's income will increase the slope of the consumer's budget line.

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