George has a weekly income (I)of $50,which he uses to purchase doughnuts (D)and coffee (C).The price of a doughnut is $1 and the price of coffee is $2.50.Suppose George's income increases to $100 and the prices of both doughnuts and coffee remain unchanged.Given this income change,one would expect George's budget line to:
A)shift to the right.
B)shift to the left.
C)rotate around the coffee axis point.
D)not be affected.

Question

Quizplus · Accepted Answer

Since George's weekly income has increased, his budget line will shift to the right. This means that he can now afford more of both doughnuts and coffee, since he has more money to allocate towards each good. However, since the prices of both goods have remained unchanged, the slope of the budget line will stay the same.

George Has a Weekly Income (I)of $50,which He Uses to Purchase