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Question 45

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Use the following to answer questions : Use the following to answer questions :   -(Figure: Income and Substitution Effects) Use Figure Income and Substitution Effects.Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls.The dashed line tangent to I<sub>1</sub> shows a hypothetical budget line reflecting: A)  the original income,the original price of cell phone minutes,and the new price of gasoline. B)  the new price of gasoline in terms of cell phone minutes and a change in income to keep Carlos on the original indifference curve. C)  the new price of gasoline in terms of cell phone minutes and a change in income to allow Carlos to reach an indifference curve higher than I<sub>1</sub>. D)  the income and substitution effects.
-(Figure: Income and Substitution Effects) Use Figure Income and Substitution Effects.Carlos is consuming his optimal consumption bundle at point A when the price of gasoline falls.The dashed line tangent to I1 shows a hypothetical budget line reflecting:


A) the original income,the original price of cell phone minutes,and the new price of gasoline.
B) the new price of gasoline in terms of cell phone minutes and a change in income to keep Carlos on the original indifference curve.
C) the new price of gasoline in terms of cell phone minutes and a change in income to allow Carlos to reach an indifference curve higher than I1.
D) the income and substitution effects.

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