Assume Doug's Budget Constraint Is Represented by Line C in the Graph

question 128

Multiple Choice

Assume Doug's budget constraint is represented by line C in the graph shown. Which of the following would cause Doug's budget constraint to shift to line B?

• A)Doug loses his job.
• B)Doug finds soda at a warehouse outlet for a lower price.
• C)Doug's grocery store raises the price of milk by 10 percent.
• D)Doug's grocery store lowers all prices by 33 percent.

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Definitions:

Interest Allowance

An amount that reduces the gross interest income earned, related to the cost of borrowing or credit facilities.

Income Summary

An account used in the closing process during accounting that accumulates revenues and expenses to determine net income or loss.

Net Loss

The amount by which total expenses exceed total revenues for a business during a specific period, indicating a reduction in equity.

Salary Allowances

Compensation or benefits on top of regular salary, often for specific purposes like housing, travel, or meals.