Asked by
leticia altaie
on Nov 04, 2024
Verified
Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be
A) AD.
B) BD.
C) CD.
D) Her new possible budget constraint is not shown on this graph.
Budget Constraint
The limitation on the consumption bundles that a consumer can afford based on their income and the prices of goods or services.
Income
The monetary payment received for work or through investments, pensions, or subsidies, used for consumption and saving.
- Analyze the process through which evolution and deviations in the budget constraint symbolize economic phenomena including income alterations, changes in cost, and effects related to substitution.
- Familiarize oneself with the interplay between budgetary constraints and consumer's decision-making avenues.
Verified Answer
CS
Learning Objectives
- Analyze the process through which evolution and deviations in the budget constraint symbolize economic phenomena including income alterations, changes in cost, and effects related to substitution.
- Familiarize oneself with the interplay between budgetary constraints and consumer's decision-making avenues.