Bobby buys cat food for his cat,Pearl.If the price of cat food falls,then Bobby's budget line will
A) rotate outward and its slope will change.
B) rotate inward and its slope will change.
C) shift outward and its slope will not change.
D) shift inward and its slope will not change.
E) either rotate or shift outward depending on whether cat food has positive or negative marginal utility.

Question

Quizplus · Accepted Answer

When the price of cat food falls, Bobby can afford to buy more cat food for the same amount of money, effectively increasing his purchasing power for cat food while keeping everything else constant. This change causes the budget line to rotate outward (indicating increased purchasing power for cat food) and its slope to change (reflecting the change in the price ratio between cat food and whatever other goods or services are represented on the other axis).

Bobby Buys Cat Food for His Cat,Pearl