Which budget constraint panel in Figure below shows the effect of an increase in income, other things constant?
Understand the Problem
The question is asking to identify which budget constraint panel, shown in a figure with various options (panels a through e), illustrates the effect of an increase in income while keeping other factors constant. This is likely related to concepts in economics, particularly consumer choice theory.
Answer
Panel e
The panel that shows the effect of an increase in income, with all other factors constant, is panel e.
Answer for screen readers
The panel that shows the effect of an increase in income, with all other factors constant, is panel e.
More Information
When income increases, the budget constraint shifts outward while keeping the same slope. This reflects greater purchasing power.
Tips
A common mistake is to confuse an increase in income with a price change, which would change the slope instead of shifting the line.
Sources
- Solved a. Which panel in Figure 5-2 shows the effect of an - Chegg - chegg.com
- 12. Which panel in Figure 6-2 shows the effect of an | Chegg.com - chegg.com
- An increase in nonlabor income that holds the wage constant expands the worker's opportunity set through a parallel shift in the budget line. - scholar.harvard.edu
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