Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be
A) AD.
B) BD.
C) CD.
D) Her new possible budget constraint is not shown on this graph.

Question

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.  Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases while the price of the goods are unchanged, her new budget constraint could be
A) AD. 
B) BD. 
C) CD. 
D) Her new possible budget constraint is not shown on this graph.

Quizplus · Accepted Answer

When income decreases while prices remain constant, the budget constraint shifts inward, parallel to the original budget line. This means Molly can afford less of both goods, which is represented by line CD, closer to the origin than EF.

Refer to the Information Provided in Figure 6