Figure: A Changing Budget Constraint for Strawberries and Shortcake (Figure: A Changing Budget Constraint for Strawberries and Shortcake) Look at the figure A Changing Budget Constraint for Strawberries and Shortcake.Seb's original budget line is given by BL1 and his original indifference curve is given by I1.Which of the following would have caused his
Budget line to move to BL2?
A)The price of strawberries increased.
B)The price of shortcake increased.
C)Seb's income decreased.
D)The price of strawberries decreased.

Question

Figure: A Changing Budget Constraint for Strawberries and Shortcake  (Figure: A Changing Budget Constraint for Strawberries and Shortcake) Look at the figure A Changing Budget Constraint for Strawberries and Shortcake.Seb's original budget line is given by BL1 and his original indifference curve is given by I1.Which of the following would have caused his
Budget line to move to BL2?
A)The price of strawberries increased. 
B)The price of shortcake increased. 
C)Seb's income decreased. 
D)The price of strawberries decreased.

Quizplus · Accepted Answer

When the price of strawberries increases, Seb's budget line shifts inward and becomes BL2. This results in a decrease in Seb's purchasing power for strawberries and shortcake, making both goods relatively more expensive for him.

Figure: a Changing Budget Constraint for Strawberries and Shortcake