Use the Following to Answer Questions

question 243

Multiple Choice

Use the following to answer questions:
Figure: Indifference Curves and Consumption Bundles
-(Figure: Indifference Curves and Consumption Bundles) Look at the figure Indifference Curves and Consumption Bundles. In the figure, the initial optimum is at a. The price of hot dogs increases, and the new equilibrium point is c. The change in hot dog consumption due to the income effect of the price change is:

• A) H₃ to H_2.
• B) H₃ to H_1.
• C) H₂ to H_1.
• D) H₁ to H_2.