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Scenario: E-Books and Sports Tickets
Phillip has an income of $300 per month, which he uses to purchase two goods, e-books and sports tickets. Each e-book costs $10, and each ticket costs $15.
-(Scenario: E-Books and Sports Tickets) Read the scenario E-Books and Sports Tickets. Phillip gets an increase in the amount of his monthly income allotted for e-books and sports tickets. Holding everything else constant, Phillip's budget line has:
A) shifted parallel inward to the origin.
B) rotated around the lower-priced good.
C) rotated around the higher-priced good.
D) shifted parallel outward away from the origin.

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Quizplus · Accepted Answer

An increase in Phillip's income, with prices of goods remaining constant, shifts the budget line outward parallel to the original, indicating he can now afford more of both goods.

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