Assume that the quantity of CDs is measured on the horizontal axis, while the quantity of movie tickets is measured on the vertical axis. If available income decreases, then the new budget line:
A) will have a smaller horizontal intercept, while keeping the same vertical intercept.
B) will have a smaller vertical intercept, while keeping the same horizontal intercept.
C) will have a smaller vertical and horizontal intercept.
D) will have a bigger vertical and horizontal intercept.

Question

Quizplus · Accepted Answer

A decrease in available income reduces the maximum quantity of both goods that can be purchased, leading to smaller intercepts on both axes.

Assume That the Quantity of CDs Is Measured on the Horizontal