Figure 7.3The price of Video Game rentals is $2 For MUA/$ and $4 for MUB/$.The price of Energy Drinks is $2.Budget = $28.Refer to Figure 7.3. A decrease in the price of video game rentals from $4 to $2 will:

A budget constraint is a straight line because:

A) the tastes and preferences of the consumer change along the constraint. B) a consumer faces a fixed price of both goods that do not change with changes in consumption. C) the opportunity cost of buying each of the goods changes along the constraint. D) a consumer has a limited money income.

Assume that the marginal propensity to consume out of disposable income is 0.8 and that the government taxes all income at a constant rate of 30%. If the gross income increases by $100, consumption will initially increase by

A) $44 B) $56 C) $70 D) $80 E) $100