Answer to Question #241721 in Microeconomics for boss

Question

True or false?

While the endowment bundle must lie on the original budget line, it need not lie on the budget line when prices change.

Answer 1

The position of the budget line depends on two factors specifically, the pay of the purchaser and costs of the two products. In the event that costs of two products stay unaltered, with an increment in income, the budget line of the purchaser movements to one side as well as the other way around. An expansion in pay causes the budget line to move outward, corresponding to the first line (holding costs consistent). An abatement in pay causes the budget line to move internally, corresponding to the first line (holding costs steady) so a shopper can purchase less of the two products with less pay. At the point when the great on the upward pivot is a composite decent, then, at that point, the slant of the budget line is equivalent to less the cost of the great on the even hub. If all buyers are value takers confronting similar costs, then, at that point, their budget lines will all have a similar incline. At the point when the great on the upward pivot is a composite decent.

Hence, the correct answer is option True.