If we observe that a consumer's budget constraint has shifted inward, we can assume that the consumer will buy
A)fewer normal goods and more inferior goods.
B)more normal goods and fewer inferior goods.
C)more normal goods and more inferior goods.
D)fewer normal goods and fewer inferior goods.

Question

Quizplus · Accepted Answer

When a consumer's budget constraint shifts inward, it indicates a decrease in their purchasing power. As a result, they are likely to buy fewer normal goods, which are typically more expensive, and may buy more inferior goods, which are cheaper alternatives.

If We Observe That a Consumer's Budget Constraint Has Shifted