Question

Different conditions in which a budget line can change class 11th

Answer 1

Answer:

IAM STUDYING CLASS 11 OF COMMERCE.KINDLY STUDY FULLY. DONT THINK  IT IS LARGE.

CHANGE IN BUDGET LINE:

• CHANGE IN INCOME : IF CONSUMER INCOME CHANGES AND PRICE OF COMMODITY REMAIN UNCHANGED,THE CONSUMER CAN BUY MORE UNITS OF COMMODITY. HENCE THE BUDGET LINE WILL BE PARALLEL TO ORGINAL BUDGET LINE.

• CHANGE IN PRICE OF COMMODITY: IF BOTH PRICE OF COMMODITY CHANGES THE BUDGET LINE WILL SHIFT. IF PRICE INCREASES IT WILL SHIFT TO RIGHT. IF PRICE DECREASES IT WILL SHIFT TO LEFT.

IF ONLY ONE COMMODITY CHANGES THE NEW BUDGET LINE BUDGET LINE WILL BE FORMED.

HOPE IT HELPS

Answer 2

Budget Line is a graphical line which portrays the allocation of consumer income on two goods based on their respective prices per unit.

Explanation:

Now a change in budget line can be expressed in two possible ways:-a) Parallel change of budget line and b) Rotation of the entire budget line.Now the conditions that lead to both circumstances are discussed below.

Parallel shift the budget line

The budget line shifts parallely when there is a change in the overall income level of the consumer.It indicates an overall shift in the purchasing power of the consumer holding the price level of the goods constant.Therefore, now the consumer either moves to a higher budget line which is above the previous line(if the consumer income rises) or lower budget line if there is a fall in consumer income.

Rotation of budget line

The rotation of budget line occurs due to a change in the relative change in price level of the goods.It means that if the price of any one good becomes cheaper or more expensive than the other then consumers will change their buying preferences accordingly by usually buying more of the cheaper good.As a result, the budget line will be rotated.