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Figure: Budget Lines for Tea and Scones
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?
A) a
B) b
C) c
D) d

Question

Use the following to answer questions :
Figure: Budget Lines for Tea and Scones 
-(Figure: Budget Lines for Tea and Scones)Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone has been $1.Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?
A) a 
B) b 
C) c 
D) d

Quizplus · Accepted Answer

When the price of both tea and scone increase to $2, Agnes will only be able to afford 10 cups of tea and 5 scones per month with her $20 budget. This means that her budget line will shift inward towards the origin as shown in chart C. Option A is incorrect because it shows a shift outward, which is not the case when the price increases. Option B is incorrect because it shows a parallel shift, which also does not occur when both prices increase. Option D is incorrect because it shows a shift to the left, which would be the case if only the price of tea increased, not both tea and scone.

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