Refer to the figure at right. Theodore's budget line has changed from A to B.Which of the following explains the change in Theodore's budget line?A. The price of food decreased, and the price of clothing increased.B. The price of food and the price of clothing increased.C. The price of food and the price of clothing decreased.D. The price of food increased, and the price of clothing decreased.E. None of the above. 40-Budget line A20-10-Budget line B20406080Food, F (units per week)Clothing, C (units per week)

Answered: 40- Budget line A 30- 20- 10- Budget…

Business

Economics

40- Budget line A 30- 20- 10- Budget line B 80 Food, F (units per week) 20 40 60 Clothing, C (units per week)

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section4.4: Supply And Demand Together

Problem 4QQ

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Question

Refer to the figure at right. Theodore's budget line has changed from A to B.
Which of the following explains the change in Theodore's budget line?
A. The price of food decreased, and the price of clothing increased.
B. The price of food and the price of clothing increased.
C. The price of food and the price of clothing decreased.
D. The price of food increased, and the price of clothing decreased.
E. None of the above.

40-
Budget line A
20-
10-
Budget line B
20
40
60
80
Food, F (units per week)
Clothing, C (units per week)

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Theodore has an initiative budget constraint as A and it is now changed to the new budget constraint that is B.

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