Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:

-Refer to Figure 21-19.Assume that the consumer has an income of $100 and currently optimizes at bundle A.When the price of marshmallows decreases to $5,which bundle will the optimizing consumer choose?
A) A
B) B
C) C
D) D

Question

Figure 21-19
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
 
-Refer to Figure 21-19.Assume that the consumer has an income of $100 and currently optimizes at bundle A.When the price of marshmallows decreases to $5,which bundle will the optimizing consumer choose?
A) A 
B) B 
C) C 
D) D

Quizplus · Accepted Answer

When the price of marshmallows decreases, the budget line will shift outward, allowing the consumer to purchase more marshmallows. As a result, the consumer will choose a bundle that includes more marshmallows, such as bundle B.

Figure 21-19 The Following Graph Illustrates a Representative Consumer's Preferences for Marshmallows