Refer to the information provided in Figure 6.5 below to answer the question(s) that follow. Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is BD. If the price of CDs increases, her new budget constraint becomes
A) AD.
B) BD.
C) CD.
D) EF.

Question

Refer to the information provided in Figure 6.5 below to answer the question(s) that follow.  Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is BD. If the price of CDs increases, her new budget constraint becomes
A) AD. 
B) BD. 
C) CD. 
D) EF.

Quizplus · Accepted Answer

When the price of CDs increases, Molly can afford fewer CDs with the same budget, causing the budget constraint to pivot inward from point D towards point A, making AD the new budget constraint.

Refer to the Information Provided in Figure 6