(Scenario: Music Downloads and Streamed Movies)Read the scenario Music Downloads and Streamed Movies.Suppose Phillip's income falls by half,and the prices for both music downloads and streamed movies also fall by half.As a result of this,Phillip: Scenario: Music Downloads and Streamed Movies
Phillip has an income of $300 per month,which he uses to purchase music downloads (MD)and streamed movies (SM).Each music download costs $1 and each streamed movie costs $5.
A)can buy fewer music downloads if he spends all of his income on music downloads.
B)can buy fewer streamed movies if he spends all of his income on streamed movies.
C)will not notice any change in his budget line.
D)will undergo a parallel shift out of his budget line.

Question

Quizplus · Accepted Answer

Phillip's income and the prices of both goods (music downloads and streamed movies) fall by the same proportion (half), so his purchasing power remains unchanged, resulting in no change in his budget line.

(Scenario: Music Downloads and Streamed Movies)Read the Scenario Music Downloads