Suppose a consumer spends his income on CDs and DVDs. If his income decreases, the budget constraint for CDs and DVDs will
A)shift outward, parallel to the original budget constraint.
B)shift inward, parallel to the original budget constraint.
C)rotate outward along the CD axis because he can afford more CDs.
D)rotate outward along the DVD axis because he can afford more DVDs.

Question

Quizplus · Accepted Answer

If the consumer's income decreases, the budget constraint will shift inward, parallel to the original budget constraint. This is because the consumer will be able to afford fewer CDs and DVDs at every price level.

Suppose a Consumer Spends His Income on CDs and DVDs