Asked by Matthew Cowell on Jun 13, 2024
Verified
(Figure: Budget Lines for Tea and Scones) Use Figure: Budget Lines for Tea and Scones.For months now,Agnes has had $20 per month to spend on tea and scones.The price of each cup of tea and each scone is $1.Which chart shows what will happen to her budget line if her income increases to $25?
A) A
B) B
C) C
D) D
Budget Line
The Budget Line is a graphical representation of all possible combinations of two goods that can be purchased with a given income level and prices.
Income Increases
Refers to a rise in the amount of money earned by individuals or households, which can influence their purchasing power and consumption patterns.
- Comprehend the impact of variations in income on budget lines and decision-making processes of consumers.
Verified Answer
KD
Keondre DotsonJun 18, 2024
Final Answer :
A
Explanation :
The budget line shifts outward from the original position, indicating that with more income, Agnes can afford more of both tea and scones while still spending all her income. The slope remains the same because the prices of tea and scones have not changed, only the amount she can spend has increased.
Learning Objectives
- Comprehend the impact of variations in income on budget lines and decision-making processes of consumers.