Figure 21-16

-Refer to Figure 21-16.When the price of X is $6,the price of Y is $24,and income is $48,Steve's optimal choice is point C.Then the price of Y decreases to $8.Steve's new optimal choice is point
A) A.
B) B.
C) D.
D) E.

Question

Figure 21-16
 
-Refer to Figure 21-16.When the price of X is $6,the price of Y is $24,and income is $48,Steve's optimal choice is point C.Then the price of Y decreases to $8.Steve's new optimal choice is point
A) A. 
B) B. 
C) D. 
D) E.

Quizplus · Accepted Answer

When the price of Y decreases to $8, Steve can afford more of good Y for the same income, shifting his budget constraint outward. His new optimal choice will be at a point where he can maximize his utility given the new prices, which is point D.

Figure 21-16 -Refer to Figure 21-16.When the Price of X Is $6,the