Suppose Jamie can choose between consuming two goods. 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 the two goods.
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

An outward shift in the budget constraint means that Jamie can now afford more of both goods, given her income and the prices of the goods. This means that she can reach a higher indifference curve, which represents a higher level of satisfaction.

Suppose Jamie Can Choose Between Consuming Two Goods