Figure 6.4
-Refer to Figure 6.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's
A)indifference curve becomes more concave away from the origin.
B)indifference curve becomes straighter.
C)budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same.
D)budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same.

Question

Figure 6.4 
-Refer to Figure 6.4.Suppose the price of pizza increases while the price of hamburger remains constant.Then, the consumer's
A)indifference curve becomes more concave away from the origin. 
B)indifference curve becomes straighter. 
C)budget constraint moves inward toward the origin on the pizza axis while the hamburger intercept remains the same. 
D)budget constraint moves outward away from the origin on the pizza axis while the hamburger intercept remains the same.

Quizplus · Accepted Answer

When the price of pizza increases while the price of hamburger remains constant, the relative price of pizza becomes higher. This means that the consumer can afford less pizza for the same amount of hamburger. As a result, the budget constraint will move inward toward the origin on the pizza axis (i.e. the consumer has less purchasing power for pizza) while the hamburger intercept remains the same. The indifference curve does not change in response to the change in prices.

Figure 6.4 -Refer to Figure 6.4.Suppose the Price of Pizza Increases While