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If the price of productB falls the budget line now pivots. The consumer now maximises utility consuming Q3 of product A and Q4 of product B. The fall in the price of product B has led to an increase in quantity demanded.}
If the price of a product falls which of the following would occur?
Indifference curves shift down
Budget line shifts down
Indifference curve shift up
Budget line pivots
Correct Answer :
D. Budget line pivots
If the price of productB falls the budget line now pivots. The consumer now maximises utility consuming Q3 of product A and Q4 of product B. The fall in the price of product B has led to an increase in quantity demanded.}