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Zorluk: KolayBudget Line and Budget Constraint

An increase in a consumer's money income, holding the prices of all goods constant, causes the slope of the budget line to become steeper.

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False. An increase in income while holding prices constant causes a parallel outward shift of the budget line, leaving its slope unchanged.
The correct answer is False. The slope of the budget line is determined strictly by the ratio of the prices of the two goods (−PXPY-\frac{P_X}{P_Y}). An increase in consumer income with prices held constant shifts both intercepts outward by the same proportion, producing a parallel shift of the budget line without altering its steepness.

Adım Adım Çözüm

1
Recall the formula for the slope of a budget line.
The slope of the budget line is given by −PXPY-\frac{P_X}{P_Y}, where PXP_X is the price of Good X on the horizontal axis and PYP_Y is the price of Good Y on the vertical axis.
The slope represents the market rate of substitution, determined entirely by relative prices.
2
Analyze the impact of an increase in nominal income (II) when PXP_X and PYP_Y remain constant.
Both the horizontal intercept (IPX\frac{I}{P_X}) and vertical intercept (IPY\frac{I}{P_Y}) increase proportionally.
Higher nominal income increases the maximum achievable quantities of both goods.
3
Determine if the slope changes.
Since neither PXP_X nor PYP_Y changes, the price ratio −PXPY-\frac{P_X}{P_Y} remains identical, causing a parallel shift rather than a change in steepness.
A change in slope requires a change in the relative price ratio (PX/PYP_X / P_Y).

Anahtar Kavram

Parallel Shifts vs. Rotations of the Budget Line
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Konular

Budget Line and Budget Constraint

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