Use the Following to Answer Question

question 8

Multiple Choice

Use the following to answer question:
-(Figure: Kristin's Budget Line) Use Figure Kristin's Budget Line.The price of a cup of cappuccino is $3,and the price of an apple is $1.Suppose Kristin initially consumes 10 cups of cappuccino and 30 apples.Then the price of apples increases to $3 each and the price of a cappuccino remains unchanged.As a result of this price change,Kristin's optimal consumption bundle changes,reflected by a decrease in the consumption of both apples and cappuccinos.This suggests that:

• A)apples are a Giffen good.
• B)cappuccino is a Giffen good.
• C)both apples and cappuccino are normal goods.
• D)apples are an inferior good.

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