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Match List-I with List-II

List-IList-II
(A) Decrease in consumer's income(I) Budget line becomes steeper
(B) Increase in price of Good X(II) Parallel and leftward shift in the budget line
(C) Equal reduction in price of both goods X and Y(III) Budget line becomes flatter
(D) Increase in price of Good Y(IV) No change in the slope of the budget line

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 3

Option 1 -> (A)-(II), (B)-(I), (C)-(III), (D)-(IV) - Incorrect matching for C and D.

Option 2 -> (A)-(I), (B)-(III), (C)-(I), (D)-(IV) - Incorrect matching for all items.

Option 3 -> (A)-(II), (B)-(I), (C)-(IV), (D)-(III) - Correct matching for all items.

Option 4 -> (A)-(II), (B)-(IV), (C)-(I), (D)-(III) - Incorrect matching for B and C.


Hence, Option 3: (A)-(II), (B)-(I), (C)-(IV), (D)-(III) -> Budget line equation: Px·X + Py·Y = M with slope = -Px/Py. (A) Decrease in income causes parallel leftward shift keeping slope unchanged. (B) Increase in Px makes slope steeper (more negative). (C) Equal reduction in both prices keeps ratio Px/Py constant, so slope unchanged (parallel outward shift). (D) Increase in Py makes slope flatter (less negative) as denominator increases. -> correct

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