If the graph shown represents Donna's budget constraint,and the price of earrings were to decrease,the slope of Donna's budget constraint would become:
A) steeper, reflecting the fact that hairbands are now relatively less expensive.
B) flatter, reflecting the fact that hairbands are now relatively more expensive.
C) steeper, reflecting the fact that earrings are now relatively less expensive.
D) flatter, reflecting the fact that earrings are now relatively more expensive.

Question

If the graph shown represents Donna's budget constraint,and the price of earrings were to decrease,the slope of Donna's budget constraint would become:
A) steeper, reflecting the fact that hairbands are now relatively less expensive. 
B) flatter, reflecting the fact that hairbands are now relatively more expensive. 
C) steeper, reflecting the fact that earrings are now relatively less expensive. 
D) flatter, reflecting the fact that earrings are now relatively more expensive.

Quizplus · Accepted Answer

When the price of earrings decreases, Donna will be able to purchase more earrings and hairbands with the same budget. This means that the budget line will shift outwards (to the right) and become flatter. This is because the opportunity cost of purchasing hairbands has decreased, making them relatively more affordable compared to before. Therefore, the slope of Donna's budget constraint would become steeper, reflecting the fact that earrings are now relatively less expensive.

If the Graph Shown Represents Donna's Budget Constraint,and the Price