The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1

-Suppose a budget line is drawn with X on the horizontal axis and Y on the vertical axis. A decrease in the price of X will cause:
A)an increase in the vertical intercept and no change in the horizontal intercept.
B)a decrease in the vertical intercept and no change in the horizontal intercept.
C)an increase in the horizontal intercept and no change in the vertical intercept.
D)a decrease in the horizontal intercept and no change in the vertical intercept.
E)a parallel, rightward shift of the budget line.

Question

The below indifference map shows the various combinations of hours of music and apples that yield different levels of utility.Figure 7.1
 
-Suppose a budget line is drawn with X on the horizontal axis and Y on the vertical axis. A decrease in the price of X will cause:
A)an increase in the vertical intercept and no change in the horizontal intercept. 
B)a decrease in the vertical intercept and no change in the horizontal intercept. 
C)an increase in the horizontal intercept and no change in the vertical intercept. 
D)a decrease in the horizontal intercept and no change in the vertical intercept. 
E)a parallel, rightward shift of the budget line.

Quizplus · Accepted Answer

A decrease in the price of X makes it cheaper relative to Y, allowing the consumer to purchase more of X for the same amount of money, thus increasing the horizontal intercept (the maximum amount of X that can be bought) without changing the vertical intercept (the maximum amount of Y that can be bought, which is unaffected by the price change in X).

The Below Indifference Map Shows the Various Combinations of Hours