Match List-I with List-II
List-I List-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:
Match List-I with List-II
| List-I | List-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
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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