Figure 21-2
In each case, the budget constraint moves from BC 1 to BC 2 .
Graph (a)
Graph (b)
Graph (c)
Graph (d)
-Refer to Figure 21-2. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods?
A)Only graph (a)
B)Only graph (d)
C)Graph (b) or graph (c)
D)None of the graphs in the figure can reflect this.

Question

Figure 21-2
In each case, the budget constraint moves from BC 1 to BC 2 .
Graph (a)
Graph (b)
Graph (c)
Graph (d)    
-Refer to Figure 21-2. Which of the graphs in the figure could reflect a simultaneous decrease in the prices of both goods?
A)Only graph (a) 
B)Only graph (d) 
C)Graph (b) or graph (c) 
D)None of the graphs in the figure can reflect this.

Quizplus · Accepted Answer

A simultaneous decrease in the prices of both goods would shift both budget lines outward and parallel to the original budget line. None of the graphs in Figure 21-2 show this.

Figure 21-2 in Each Case, the Budget Constraint Moves from BC1 to BC1

Figure 21-2 in Each Case, the Budget Constraint Moves from BC₁ to BC₁