Refer to the diagram. If the budget line shifts from ab to ac, the
A) price of K has increased.
B) consumer's money income has fallen.
C) price of K has decreased.
D) price of J has increased.

Question

Refer to the diagram. If the budget line shifts from ab to ac, the 
A) price of K has increased. 
B) consumer's money income has fallen. 
C) price of K has decreased. 
D) price of J has increased.

Quizplus · Accepted Answer

If the budget line shifts from ab to ac, the consumer can now afford to buy more J and less K, indicating that the price of K has increased.

Refer to the Diagram