Assume that Dusty has $30 in income,the price of a loaf of bread is $1.50,and the price of a jar of peanut butter is $3.
If Dusty's income falls to $20,the rational spending rule would predict that Dusty will buy
A)more bread and less peanut butter.
B)less bread and more peanut butter.
C)less bread and less peanut butter.
D)more bread and the same amount of peanut butter.

Question

Quizplus · Accepted Answer

With a decrease in income, Dusty will have to reduce consumption of both goods to stay within the new budget constraint.

Assume That Dusty Has $30 in Income,the Price of a Loaf