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Define a Budget Line. When can it shift to the right? |
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Answer» Budget Line is the locus of points that show such combinations of two goods that the consumer can buy with his given income and at given prices. Budget line depends upon an income of the consumer and the prices of the two goods. If prices of the two goods remain unchanged, then with an increase in income, budget line of the consumer shifts to the right. Similarly, when there is fall in the prices of both the goods X and y and if the income of the consumer remains unchanged, then also the budget line will shift to the right. |
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