Use the following to answer question:
-(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:
A)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged.
B)a decrease in income with prices constant.
C)a change in tastes.
D)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged or a decrease in income with prices constant.

Question

Use the following to answer question: 
-(Figure: Indifference Curves and Consumption Bundles)Use Figure Indifference Curves and Consumption Bundles.The lines AA and BC are parallel.The optimal consumption point could shift from b to c as a result of any of the following EXCEPT:
A)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged. 
B)a decrease in income with prices constant. 
C)a change in tastes. 
D)an equal percentage increase in the prices of hot dogs and pizza while income is unchanged or a decrease in income with prices constant.

Quizplus · Accepted Answer

A change in tastes would shift the consumer's preferences and could result in a shift from point b to point c on the indifference curve. However, an equal percentage increase in the prices of hot dogs and pizza while income is unchanged, a decrease in income with prices constant, or both would result in a parallel shift of the budget constraint, keeping the optimal consumption point at point b.

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