Asked by Nonie Kalra on Jun 12, 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 has been $1.Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2?
A) A
B) B
C) C
D) D
Budget Line
A graphical representation showing all possible combinations of two goods that can be purchased with a given budget at set prices.
Price Increase
An upward adjustment in the selling price of goods or services.
Tea And Scone
A traditional British snack or light meal, consisting of a cup of tea and a small cake or biscuit.
- Examine the influence of price variations on budget constraints and the range of consumption options.
Verified Answer
CJ
Courtland JamesJun 17, 2024
Final Answer :
C
Explanation :
When the price of both tea and scones increase to $2, Agnes' budget line will shift inward as she will not be able to purchase as many cups of tea and scones with her limited budget of $20. The budget line in Chart C shows a shift inward, reflecting the impact of the price increase.
Learning Objectives
- Examine the influence of price variations on budget constraints and the range of consumption options.