Assume Claudia's budget constraint is demonstrated by line A in the graph shown.Which of the following would cause Claudia's budget constraint to shift to line C?
A) The price of books dropped.
B) The price of movie tickets dropped.
C) Claudia's preferences for these two goods decreased.
D) Claudia's income decreased.

Question

Assume Claudia's budget constraint is demonstrated by line A in the graph shown.Which of the following would cause Claudia's budget constraint to shift to line C?
A) The price of books dropped. 
B) The price of movie tickets dropped. 
C) Claudia's preferences for these two goods decreased. 
D) Claudia's income decreased.

Quizplus · Accepted Answer

Claudia's budget constraint shows the combinations of books and movie tickets that she can afford given her income and the prices of the two goods. If Claudia's income decreases, her budget constraint will shift inward, reflecting her reduced ability to purchase both goods. Therefore, only option D can cause Claudia's budget constraint to shift to line C. Options A, B, and C would cause movements along Claudia's original budget constraint, but not a shift to a new one.

Assume Claudia's Budget Constraint Is Demonstrated by Line a in the Graph