A budget line for Shannon shows her consumption options for two of her favorite goods. An increase in a Shannon's income would lead to: Group of answer choices a) a parallel shift in her budget line to the left, allowing her to buy less of both goods. b) a parallel shift in her budget line to the right, allowing her to buy more of both goods. c) either a shift of the budget line to the right or the left depending on Shannon's.

Question

Social Studies

Arielle Bradshaw

10 September, 03:11

A budget line for Shannon shows her consumption options for two of her favorite goods. An increase in a Shannon's income would lead to: Group of answer choices a) a parallel shift in her budget line to the left, allowing her to buy less of both goods. b) a parallel shift in her budget line to the right, allowing her to buy more of both goods. c) either a shift of the budget line to the right or the left depending on Shannon's.

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Answers (1)

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Koba · Answer 1

The answer is B - A parallel shift in her budget line to the right, allowing her to buy more of both goods.

Explanation:

A budget line is a straight line that slopes downward that illustrates graphically the combination between two products which a consumer can afford buy at a given market price with a given income. It separates what the consumer can afford from what the consumer cannot afford.

An increase the consumer's income will cause the budget line to shift outward (to the right), parallel to the original line with a given price. This means that the consumer can buy more goods with more income. However, if the consumer's income decreases, the line on the graph will shift downward (to the left) but will retain the same slope.

Therefore, Shanon's increase in her income would lead to a parallel shift in her budget line to the right allowing her to buy more goods.