A candy bar sells for 50 cents, video games are 25 cents each, the horizontal (candy)intercept of Ann's budget line is 12, and the vertical (video game)intercept of Ann's budget line is 24.Which of the following best describes what would happen to the budget line if Ann's income decreased?
A)It would shift rightward to a parallel position.
B)It would shift rightward to a nonparallel position.
C)It would shift leftward to a parallel position.
D)It would shift leftward to a nonparallel position.
E)Nothing.

Question

Quizplus · Accepted Answer

Since the horizontal intercept of Ann's budget line is 12 (which corresponds to 24 candy bars), if her income decreases, she will not be able to purchase as many candy bars, so the budget line will shift leftward. Since the vertical intercept of Ann's budget line is 24 (which corresponds to 96 video games), this will remain constant. Therefore, the budget line will shift leftward to a parallel position.

A Candy Bar Sells for 50 Cents, Video Games Are