-In the above figure, Reggie's budget line rotates outward from BL₁ to BL₂. He initially consumes at point A. If his new consumption bundle is at point B, this implies that kiwi fruit and mangoes are A) both lower in price. B) both inferior goods. C) neither substitutes nor complements. D) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The outward rotation of the budget line suggests a change in the price of one good, not both. If Reggie moves from point A to point B, it indicates a change in consumption due to the price change, but it doesn't necessarily imply that both goods are inferior or that they are neither substitutes nor complements.

-In the Above Figure, Reggie's Budget Line Rotates Outward from BL1

-In the Above Figure, Reggie's Budget Line Rotates Outward from BL₁