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Economics (AS & A Level) · Feb / March 2022 · Paper 32 · Question 5

9708Indifference curves and budget lines

XY is the budget line of an individual consumer. [Diagram: axes labelled 'quantity of good M' (vertical) and 'quantity of good N' (horizontal), origin O, budget line XY running from X on the vertical axis to Y on the horizontal axis.] Which changes could leave the position of XY unchanged?

  1. Aconsumer's income: decrease; price of good M: decrease; price of good N: increase
  2. Bconsumer's income: decrease; price of good M: increase; price of good N: increase
  3. Cconsumer's income: increase; price of good M: increase; price of good N: decrease
  4. Dconsumer's income: increase; price of good M: increase; price of good N: increase

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Correct answer: D. consumer's income: increase; price of good M: increase; price of good N: increase

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