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Figure: Income and Substitution Effects
-(Figure: Income and Substitution Effects) Look at the figure Income and Substitution Effects. Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls. The dashed line tangent to I1 shows a hypothetical budget line reflecting:
A) the original income, the original price of cell phone minutes, and the new price of gasoline.
B) the new price of gasoline in terms of cell phone minutes and a change in income to keep Carlos on the original indifference curve.
C) the new price of gasoline in terms of cell phone minutes and a change in income to allow Carlos to reach an indifference curve higher than I1.
D) the income and substitution effects.
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