Figure 10-6

-Refer to Figure 10-6.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Question

Figure 10-6
 
-Refer to Figure 10-6.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's

Quizplus · Accepted Answer

When the price of pizza increases while the price of hamburger remains constant, the budget constraint (represented by the straight line) will rotate inward toward the origin on the pizza axis while the hamburger intercept remains the same. This is because the consumer's purchasing power for pizza has decreased, but their purchasing power for hamburger remains the same. As a result, the consumer will have to choose a lower quantity of pizza in order to buy the same quantity of hamburger as before. This will cause the indifference curve (represented by the curved lines) to become less steep, indicating a lower willingness to substitute hamburger for pizza. Therefore, the indifference curve becomes more convex toward the origin.

Figure 10-6 -Refer to Figure 10-6.Suppose the Price of Pizza Increases While