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 and the price of CDs increases, her new budget constraint could be
A) CD.
B) BD.
C) AD.
D) Both B and C are correct.

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 and the price of CDs increases, her new budget constraint could be
A) CD. 
B) BD. 
C) AD. 
D) Both B and C are correct.

Quizplus · Accepted Answer

A decrease in income and an increase in the price of CDs would both reduce Molly's purchasing power, shifting her budget constraint inward. Both BD and AD represent inward shifts from EF, indicating reduced purchasing power for CDs and possibly other goods, consistent with the changes described.

Refer to the Information Provided in Figure 6