Multiple Choice
Suppose the price of a pizza is R80, the price of a milk shake is R20, and the consumer's weekly income is R320. Suppose we have constructed the consumer's budget line with pizzas on the vertical axis and milk shakes on the horizontal axis. Given this information, if the price of a milk shake doubles to R40, then what will happen to the budget line?
A) It will move so that it intersects the horizontal axis at 16 milk shakes per week.
B) Its slope rises to -1/2.
C) It will move so that it intersects the horizontal axis at 8 milk shakes per week.
D) It will shift inward but remain parallel to its original position.
Correct Answer:
Verified
Correct Answer:
Verified
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