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JAMB Economics 2014 Question 12

Question 12

Theory of Consumer Behaviour

A rightward shift of the budget line is caused by a

  1. A.fall in the commodity relative price.
  2. B.rise in the commodity relative price.
  3. C.fall in consumer income.
  4. D.change in consumer taste.
Show the answer and explanation

Answer: A (fall in the commodity relative price.)

Explanation

When a good becomes cheaper, the same income buys more of it, so the budget line moves outward to the right.