Question

Which of the following would cause the budget line to rotate outward from the X-axis?

Options

• Increase in income

• Decrease in price of the good on the X-axis

• Increase in price of the good on the Y-axis

• Decrease in price of the good on the Y-axis

Answer 1

Decrease in price of the good on the X-axis

Explanation:

If the price of the good on the X-axis falls, more of it can be bought, making the budget line rotate outward from the X-axis.