If we observe that Jamie's budget constraint has moved outward, then we know for certain that
A)her income must have increased.
B)she will be indifferent between goods X and Y.
C)the price of one or both of the goods must have decreased.
D)she can reach a higher indifference curve.

Question

Quizplus · Accepted Answer

If Jamie's budget constraint has moved outward, it means that she can now afford more of both goods X and Y. This could be due to an increase in her income or a decrease in the price of one or both of the goods. However, it is not certain that her income has increased or that she will be indifferent between goods X and Y.

If We Observe That Jamie's Budget Constraint Has Moved Outward