Johnny consumes only bread and milk. When thinking of his budget constraint, assume that milk is on the horizontal axis. If the price of milk rises, his budget constraint will:
A) shift outwards
B) shift inwards
C) pivot inwards along the horizontal axis
D) pivot inwards along the vertical axis

Question

Quizplus · Accepted Answer

When the price of milk rises, Johnny can afford less milk for the same amount of money, causing the budget constraint to pivot inwards along the horizontal axis (milk axis).

Johnny Consumes Only Bread and Milk