Consider the consumer's problem with two goods, good X and good Y. Is it possible that the budget line of the consumer, given by the equation pyX + PyY = I shifts to the right and parallel to its original position in (X, Y) plane while the income () remains constant? Provide an analytical explanation for your response. (Hint: the budget line shifts to the right and parallel to its original position when the income I rises and prices constant. This question asks if the prices can change in a certain way that the budget line shifis as if income had increased.)
Consider the consumer's problem with two goods, good X and good Y. Is it possible that the budget line of the consumer, given by the equation pyX + PyY = I shifts to the right and parallel to its original position in (X, Y) plane while the income () remains constant? Provide an analytical explanation for your response. (Hint: the budget line shifts to the right and parallel to its original position when the income I rises and prices constant. This question asks if the prices can change in a certain way that the budget line shifis as if income had increased.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Consider the consumer's problem with two goods, good X and good Y. Is it
possible that the budget line of the consumer, given by the equation pyX + PyY =
I shifts to the right and parallel to its original position in (X, Y) plane while the
income () remains constant? Provide an analytical explanation for your response.
(Hint: the budget line shifts to the right and parallel to its original position when
the income I rises and
in a certain way that the budget line shifis as if income had increased.)
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