Figure 21-17
-Refer to Figure 21-17. When the price of X is $6, the price of Y is $24, and income is $48, Paul's optimal choice is point C. Then the price of Y decreases to $8. Paul's new optimal choice is point
A)A.
B)B.
C)D.
D)E.

Question

Figure 21-17 
-Refer to Figure 21-17. When the price of X is $6, the price of Y is $24, and income is $48, Paul's optimal choice is point C. Then the price of Y decreases to $8. Paul's new optimal choice is point
A)A. 
B)B. 
C)D. 
D)E.

Quizplus · Accepted Answer

When the price of Y decreases to $8, Paul can afford more of good Y for the same income, shifting the budget line outward. Point D represents the new optimal choice where the budget line is tangent to the highest possible indifference curve.

Figure 21-17 -Refer to Figure 21-17. When the Price of X Is