In the diagram, the consumer budget line shift from JK to GH. What can definitely be deduced from the diagram?
Question 1 Report
In the diagram, the consumer budget line shift from JK to GH. What can definitely be deduced from the diagram?
Answer Details
From the given diagram, it can be deduced that there has been a reduction in the price of at least one of the goods A or B, while the price of the other good has remained the same. This is because the consumer budget line has shifted outward, allowing the consumer to purchase more of both goods A and B than before.
However, we cannot deduce whether there has been an increase in the consumer's money income, as the shift in the budget line could also be due to other factors such as a change in prices or the introduction of a new promotion. Additionally, we cannot determine which of the goods A or B has experienced a price reduction, as the diagram does not provide this information.
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