If a consumer purchases two goods,food (measured along the
axis) and housing (measured along the
axis) ,then what happens to the slope of the consumer's budget constraint if the price of food falls?
A) The new budget constraint shifts inward but is parallel to the original budget constraint.
B) The new budget constraint pivots inward (towards the origin) along the
axis. The new slope is steeper than the original slope.
C) The new budget constraint pivots inward (towards the origin) along the
axis. The new slope is flatter than the original slope.
D) The new budget constraint pivots outward (away from the origin) along the
axis. The new slope is flatter than the original slope.
Correct Answer:
Verified
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