Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then: a. The budget constraint will expand (rotate away from the origin),...

Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then:

a. The budget constraint will expand (rotate away from the origin), shifting the budget line outward indicating fewer choices are now affordable and a lower utility level is now possible.

b. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating more choices are now affordable and a lower utility level is now possible.

c. The budget constraint will contract (rotate towards the origin), shifting the budget line outward indicating fewer more are now affordable and a higher utility level is now possible.

d. The budget constraint will contract (rotate towards the origin), shifting the budget line inward indicating fewer choices are now affordable and a lower utility level is now possible.

Jun 08, 2022

SOLUTION.PDF

Assuming the two good case. When a person is attempting to maximize utility and the price of one of the two goods increases, then: a. The budget constraint will expand (rotate away from the origin),...

Get Answer To This Question

Related Questions & Answers

Submit New Assignment