Refer to the information provided in Figure 6.5 below to answer the questions that follow. Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases and the price of CDs increases, her new budget constraint could be
A) CD.
B) BD.
C) AD.
D) Both B or C are correct.

Question

Refer to the information provided in Figure 6.5 below to answer the questions that follow.  Figure 6.5
-Refer to Figure 6.5. Molly's budget constraint is EF. If her income decreases and the price of CDs increases, her new budget constraint could be
A) CD. 
B) BD. 
C) AD. 
D) Both B or C are correct.

Quizplus · Accepted Answer

A decrease in income shifts the budget constraint inward, and an increase in the price of CDs makes the budget constraint steeper. Both BD and AD reflect these changes.

Refer to the Information Provided in Figure 6