Refer to the Information Provided in Figure 6

question 30

Multiple Choice

Refer to the information provided in Figure 6.7 below to answer the question(s) that follow. Figure 6.7
-Refer to Figure 6.7. Along budget constraint AB, the price of good X is $25 and the price of good Y is $18. If the price of Y decreases to $14, the budget constraint will

• A) pivot in at point B.
• B) pivot out at point A.
• C) shift in parallel to AB.
• D) pivot in at point A.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to supply a good for and the actual amount they receive by selling it.

Market Price

The current price at which a goods or service can be bought or sold in a particular market.

Consumer Surplus

The gap between what consumers are prepared and capable of paying for a product or service and what they end up spending.

Supply Change

An alteration in the quantity of goods or services that producers are willing and able to sell in the market, due to factors like price, technology, or input costs.