If consumer income increases then the consumer will be able to purchase higher combinations of goods. Hence an increase in consumer income will result in a shift in the budget line. the prices of the two goods have remained the same, therefore, the increase in income will result in a parallel shift in the budget line.
Assume consumer income increased to Rs 15.So, now he can buy more quantities of both goods.
Increase in income
An Increase in income makes the purchase of more of either one or both items possible.
If consumer income falls then there would be a corresponding parallel shift to the left to represent a fall in the potential combinations of the two goods that can be purchased.Now, suppose the consumer income falls to RS. 9.
Fall in Income
An decrease in income makes the purchase of less of either one or both items possible.
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