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

When the amount available to spend increases from $600 to $800, the budget line shifts outward along both the horizontal and vertical axes, allowing for more combinations of books and compact disks to be purchased. This is depicted as a parallel shift of the budget line in Exhibit 6-30. As a result, the consumer can now choose from a greater variety of options within their budget constraint, including those that were not affordable before.