Assume that Anna buys peanut butter and bread.If the price of peanut butter falls,then
A)One end of her budget constraint will move away from the origin.
B)Her entire budget constraint will shift toward the origin.
C)Her entire budget constraint will shift away from the origin.
D)Her indifference curves will shift away from the origin.

Question

Quizplus · Accepted Answer

If the price of peanut butter falls, Anna will be able to afford more peanut butter for the same amount of money. This means that one end of her budget constraint, representing the amount of peanut butter she can buy, will move away from the origin, while the other end, representing the amount of bread she can buy, will stay the same. Therefore, Choice A is correct.

Assume That Anna Buys Peanut Butter and Bread