Nick has $300 a month to spend on detailing his sports car or buying bottles of good wine. It costs $100 to have his car detailed and $50 for a bottle of wine. He currently buys four bottles of wine and has his car detailed once a month. If the price of detailing his car decreased to $75, Nick's budget constraint:
A. would shift straight outward, because he is relatively wealthier.
B. would rotate and change slope because relative prices have changed.
C. would shift straight inward because he is relatively wealthier.
D. One cannot determine what would happen without knowing Nick's marginal utility of each good.
B. would rotate and change slope because relative prices have changed.
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Explain how changes in the price of goods and the consumer's budget affect the budget line
What will be an ideal response?
The Fisher effect says that
a. the nominal interest rate adjusts one for one with the inflation rate. b. the growth rate of the money supply is negatively related to the velocity of money. c. real variables are heavily influenced by the monetary system. d. All of the above are correct.