Exhibit 6-30
-Consider Exhibit 6-30. Assume that you initially have $600 to spend on books and compact disks. What happens if the amount you have to spend increases to $800?
A) The budget line shifts inward along the horizontal axis.
B) The budget line shifts inward along the vertical axis.
C) The budget line shifts outward along the horizontal axis and the vertical axis.
D) The budget line shifts outward along the vertical axis.
E) The budget line shifts outward along the horizontal axis.

Question

Exhibit 6-30 
-Consider Exhibit 6-30. Assume that you initially have $600 to spend on books and compact disks. What happens if the amount you have to spend increases to $800?
A) The budget line shifts inward along the horizontal axis. 
B) The budget line shifts inward along the vertical axis. 
C) The budget line shifts outward along the horizontal axis and the vertical axis. 
D) The budget line shifts outward along the vertical axis. 
E) The budget line shifts outward along the horizontal axis.

Quizplus · Accepted Answer

An increase in the budget from $600 to $800 will cause an outward shift of the budget line along both the horizontal and vertical axes. This is because the increase in budget allows the consumer to purchase more of both books and compact disks.

Exhibit 6-30 -Consider Exhibit 6-30. Assume That You Initially Have $600 to Have