SELECT * FROM question_mgmt as q WHERE id=10211 AND status=1 SELECT id,question_no,question,chapter FROM question_mgmt as q WHERE courseId=3 AND subId=60 AND chapterId=609 and ex_no='1' AND status=1 ORDER BY CAST(question_no AS UNSIGNED)

Question:

How does the budget line change if the price of good 2 decreases by a rupee
but the price of good 1 and the consumer’s income remain unchanged?

Answer:

P1=Rs.4
P2 = Rs.5
P12= Rs.4

M = Rs. 20
Since the income and the price of good 1 are unchanged, the decrease in the price of good 2 will increase the vertical intercept of the budget line. The new budget line will also pivot outwards around the same horizontal intercept.

Horizontal intercept will be= =

Vertical intercept will be=

Slope =
The slope of the new budget line will be more and the new budget line will be steeper than the original one.


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