Question

Suppose you have drawn a consumer's budget line for food and clothing, with food on the x-axis. Which of the following events would make the budget line steeper?
a) Income increases.
b) Price of food increases.
c) Price of clothing increases.
d) None of the above.

Answer 1

Answer: The correct answer is "a) Income increases.".

Explanation:

a) Income increases - An increase in income would cause more money to spend on food and clothing, so the budget line would be steeper.

b) Price of food increases , and c) Price of clothing increases. -An increase in both the price of food and clothing would cause (as long as Income remains the same) that less quantities of both goods can be acquired, because they would cost more, therefore they would make the budget line Minor.