Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?
A) Alan could have experienced a drop in income.
B) The price of books could have increased.
C) Alan could have decided he doesn't like going to the movies as much as he used to.
D) The price of movie tickets could have increased.

Question

Assume Alan's budget constraint is demonstrated by line A in the graph shown.Which of the following could cause Alan's budget constraint to change to line B?
A) Alan could have experienced a drop in income. 
B) The price of books could have increased. 
C) Alan could have decided he doesn't like going to the movies as much as he used to. 
D) The price of movie tickets could have increased.

Quizplus · Accepted Answer

If the price of movie tickets increases, Alan would not be able to afford as many movie tickets as before, causing his budget constraint to shift inward (from line A to line B). A drop in income (choice A) would also cause the budget constraint to shift inward, but it is not given in the question that Alan's income has decreased. Similarly, if the price of books increases (choice B), Alan would not be able to afford as many books, but this would not affect his ability to buy movie tickets. Choice C, Alan deciding he doesn't like movies as much, may affect his preferences but would not directly affect his budget constraint.

Assume Alan's Budget Constraint Is Demonstrated by Line a in the Graph