FIGURE 6-11
-Refer to Figure 6-11. The line joining points E1 and E3 is known as , which shows how .
A) a price consumption line; consumption changes as one price changes, with money income held constant
B) an income consumption line; consumption changes as income changes, with relative prices held constant
C) a price consumption line; consumption changes as money income and relative prices change
D) an income consumption line; consumption changes with changing relative prices and constant income

Question

FIGURE 6-11
-Refer to Figure 6-11. The line joining points E1 and E3 is known as , which shows how .
A) a price consumption line; consumption changes as one price changes, with money income held constant 
B) an income consumption line; consumption changes as income changes, with relative prices held constant 
C) a price consumption line; consumption changes as money income and relative prices change 
D) an income consumption line; consumption changes with changing relative prices and constant income

Quizplus · Accepted Answer

The line joining points E1 and E3 is a price consumption line because it shows how consumption changes as one price changes, with money income held constant. It does not represent an income consumption line since income is not held constant, but rather prices are held constant. Therefore, options B and D are incorrect. Option C is also incorrect because it suggests that both money income and prices are changing, which is not the case.

FIGURE 6-11 -Refer to Figure 6-11. the Line Joining Points E1 and E1