Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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14

Transcribed Image Text:**The budget line will shift parallel to the right if:**
- ○ the price of the good on the vertical axis increases.
- ○ income decreases.
- ○ income increases.
- ○ the price of the good on the vertical axis decreases.
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**Explanation:**
In the context of consumer theory, the budget line represents the combinations of two goods that a consumer can purchase given their income and the prices of the goods. A shift to the right of the budget line indicates that the consumer can afford more of both goods. This generally happens when the consumer's income increases. The other factors listed would either cause a movement along the budget line or a shift in the opposite direction.
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