What is the effect of simultaneous and same percentage change in the prices of both the goods on the budget line? Use diagram
The change in the price of a good results in the rotation of the budget line. Since in this question, price of both the goods are changing simultaneously and equally, the budget line will shift. With an equal and simultaneous increase in the price if both the goods, the budget line will shift inward. On the other hand with an equal and simultaneous decrease in the price if both the goods, the budget line will shift outward.