CAIE A-Level Economics 7.2.2 Budget Line Shifts

CAIE A-Level Economics 7.2.2 Budget Line Shifts
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise calculating budget-line intercepts and distinguishing parallel income shifts from price-driven pivots, while recognising that preference changes leave the constraint…

How this is tested

  • calculate each intercept as money income divided by the corresponding good's price
  • draw a parallel outward or inward shift when real income changes at unchanged relative prices
  • pivot the line when one price changes and exclude tastes because they alter preferences, not budget

Question 1

[Maximum number: 1]

The diagram shows budget lines for an individual consumer.

Figure for Question 1 — CAIE A-Level Economics

What could explain the shift in the budget line from QR to ST?

A

a decrease in the consumer's real income

B

a decrease in the quality of both goods

C

an increase in the consumer's money income

D

an increase in the price of both goods