How does the budget line change if the consumer’s income increases to Rs 40 but the prices remain unchanged?

Question

Philoid · Accepted Answer

The budget line will be expressed as

4X + 5Y = 40

As income has increased so the consumer can purchase more of both the commodities and the budget line will shift parallelly outwards to A’B’ from AB

The slope of new budget line will be

- 4/5 = X/Y

X/Y = - 0.8