Referring to the graph below (Figure 3) showing a consumer's initial budget line (labeled BO) and...

Transcribed Image Text:

Referring to the graph below (Figure 3) showing a consumer's initial budget line (labeled BO) and new budget line (labeled B1) for two goods, X and Y, and two different indifference curves (IC1- IC2). ICt Figure 3 Consider the shift in the budget line from B0 to B1. Which of the statements cannot explain the observed shift in the budget line? O a. The consumer's income doubled and the prices of both X and Y tripled. b. The consumer's income is unchanged and the prices of both X and Y increased. O c. The consumer's income increased and prices remained constant. O d. The consumer's income decreased and prices remained constant. O e. The consumer's income decreased by 25% and the prices of both X and Y decreased by 5%. Referring to the graph below (Figure 3) showing a consumer's initial budget line (labeled BO) and new budget line (labeled B1) for two goods, X and Y, and two different indifference curves (IC1- IC2). ICt Figure 3 Consider the shift in the budget line from B0 to B1. Which of the statements cannot explain the observed shift in the budget line? O a. The consumer's income doubled and the prices of both X and Y tripled. b. The consumer's income is unchanged and the prices of both X and Y increased. O c. The consumer's income increased and prices remained constant. O d. The consumer's income decreased and prices remained constant. O e. The consumer's income decreased by 25% and the prices of both X and Y decreased by 5%.

Answer rating: 100% (QA)

When the crossprice elasticity demand sign is positive then both goods will be substitute goods The ... View the full answer