George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). The price of a doughnut is $1 and the price of coffee is $2.50. Suppose George's income increases to $100 and the prices of both doughnuts and coffee remain unchanged. Given this income change, one would expect George's budget line:
A) to shift to the right.
B) to shift to the left.
C) to rotate around the coffee axis point.
D) not to be affected.

Question

Quizplus · Accepted Answer

When George's income increases, his budget line shifts to the right, indicating he can now afford more of both goods (doughnuts and coffee) while prices remain unchanged.

George Has a Weekly Income (I) of $50, Which He