Figure: Kristin's Budget Line
(Figure: Kristin's Budget Line) Look at the figure Kristin's Budget Line.The price of a cup of cappuccino is $3, and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then, the price of apples increases to $3 each and the price of a cappuccino remains unchanged.As a result of the price change, Kristin's optimal consumption bundle changes and is reflected by a decrease in the consumption of both apples and cappuccinos.If Kristin is to maintain the same level of utility as before the price change, she must:
A) increase her income.
B) decrease her income.
C) keep her income the same, since only one good's price changed.
D) increase it by $2.
Correct Answer:
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