The following figure shows a consumer's budget constraint for jeans and sweaters.

-Refer to the figure above.Suppose B₂ is the original budget constraint of a consumer.A change in the budget constraint from B₂ to B₃ indicates ________.
A) a decrease in the price of jeans
B) a decrease in the price of sweaters
C) an increase in the consumer's income
D) a decrease in the consumer's income

Question

The following figure shows a consumer's budget constraint for jeans and sweaters.
 
-Refer to the figure above.Suppose B₂ is the original budget constraint of a consumer.A change in the budget constraint from B₂ to B₃ indicates ________.
A) a decrease in the price of jeans 
B) a decrease in the price of sweaters 
C) an increase in the consumer's income 
D) a decrease in the consumer's income

Quizplus · Accepted Answer

A change in the budget constraint from B₂ to B₃, where B₃ allows the consumer to purchase more of both goods than B₂, indicates an increase in the consumer's income. This is because the consumer can now afford a larger combination of both jeans and sweaters, suggesting that their purchasing power has increased, typically due to higher income.

The Following Figure Shows a Consumer's Budget Constraint for Jeans