If the price of a product increases, then the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases.

Question

Kian Mcdaniel

Business

16 June, 10:40

If the price of a product increases, then the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, decreases. the budget line rotates and the optimal quantity demanded, which corresponds to the higher price, increases. the budget line shifts outward and the optimal quantity demanded, which corresponds to the higher price, decreases. the budget line shifts inward and the optimal quantity demanded, which corresponds to the higher price, increases.

+2

Answers (1)

Know the Answer?

Camille Boyer · Answer 1

Budget Line rotates inwards (leftwards / downwards) on that axis, optimal quantity demanded at that higher price.

Explanation:

Budget line represents product combinations that a consumer can afford, using all income with given prices & income.

If price of a product increases, the consumer can consume lesser amount of the product due to higher prices. So, the budget line rotates inwards (leftwards / downwards) on the corresponding x / y axis denoting that good.

So, inwards rotation of the budget line on the corresponding axis representing the price risen good - leads to reduction in the quantity of the good whose price has risen.