Assume that the quantity of CDs is measured on the horizontal axis,while the quantity of movie tickets is measured on the vertical axis.If available income decreases,then
A)the horizontal intercept of the budget line decreases,while the vertical intercept remains unchanged.
B)the vertical intercept of the budget line decreases,while the horizontal intercept remains unchanged.
C)the budget line will shift inward.
D)the budget line will shift outward.

Question

Quizplus · Accepted Answer

If available income decreases, the budget line will shift inward. This is because the consumer can no longer afford the same amount of both goods as before. The new budget line will show the combination of CDs and movie tickets that the consumer can afford with the reduced income, and it will be inside the original budget line. Neither the horizontal intercept nor the vertical intercept will remain unchanged.

Assume That the Quantity of CDs Is Measured on the Horizontal