Match List-I with List-II

List-I	List-II
(A) Increase in consumers' income	(I) Budget line becomes flatter
(B) Decrease in price of good on X axis	(II) No change in the slope of budget line
(C) Equal increase in price of both good X and good Y	(III) Parallel and rightward shift in their budget line
(D) Decrease in Price of the good on Y axis	(IV) Budget line becomes steeper

Choose the correct answer from the options given below:

To correctly match these concepts, we need to look at the budget line equation and its slope. The slope of a budget line is determined by the price ratio of the two goods: $P_X / P_Y$.

Here is a breakdown of how each scenario affects the budget line:

1. Increase in consumers' income (A matches with III)

When a consumer's income increases while the prices of the goods stay exactly the same, the consumer can afford to buy more of both Good X and Good Y. Because the price ratio hasn't changed, the slope remains the same. This causes a parallel and rightward shift of the entire budget line.

2. Decrease in price of good on X axis (B matches with I)

If Good X becomes cheaper, the consumer can buy a larger maximum quantity of Good X. The budget line pivots outward along the X-axis while the Y-intercept stays fixed. Mathematically, the numerator in our slope formula ($P_X / P_Y$) decreases, which makes the overall value smaller. Graphically, this means the budget line becomes flatter.

3. Equal increase in price of both good X and good Y (C matches with II)

If the prices of both goods increase by the exact same proportion, the ratio between their prices ($P_X / P_Y$) remains mathematically unchanged. While the budget line will shift inward (to the left) because the consumer's purchasing power has dropped, there will be no change in the slope of the budget line.

4. Decrease in Price of the good on Y axis (D matches with IV)

If Good Y becomes cheaper, the maximum affordable amount of Good Y increases, causing the budget line to pivot upward along the Y-axis (with the X-intercept remaining fixed). Because the denominator in our slope formula ($P_X / P_Y$) gets smaller, the absolute value of the slope increases. This means the budget line becomes steeper.

Conclusion:

Following this economic logic, the correct matching sequence is (A) - (III), (B) - (I), (C) - (II), (D) - (IV).