Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac,
A) are consistent with a downsloping demand curve for product K.
B) imply that the consumer's money income has declined, but his or her real income has increased.
C) imply consumer irrationality since the dearer product is being substituted for the cheaper product.
D) suggest that K is an inferior good.

Question

Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac, 
A) are consistent with a downsloping demand curve for product K. 
B) imply that the consumer's money income has declined, but his or her real income has increased. 
C) imply consumer irrationality since the dearer product is being substituted for the cheaper product. 
D) suggest that K is an inferior good.

Quizplus · Accepted Answer

The Answer of Refer to the diagram. The equilibrium points shown in the diagram, along with the price change that produced the shift of the budget line from ab to ac, 
A) are consistent with a downsloping demand curve for product K. 
B) imply that the consumer's money income has declined, but his or her real income has increased. 
C) imply consumer irrationality since the dearer product is being substituted for the cheaper product. 
D) suggest that K is an inferior good.

Refer to the Diagram