In this diagram, budget line goes flater from $P_1P_2$ to $P_2P_1'$. The reason for budget line being flater is :
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : Goods-B price decreases
When the budget line goes flatter from $P_1 P_2$ to $P_2P_1$, it implies a change in the relative prices of goods A and B along the budget line. A flatter budget line typically indicates a decrease in the relative price of the good on the horizontal axis (Goods B) compared to the good on the vertical axis (Goods A). On the other hand, increase in price of good B will make the budget line steeper.