-In the Figure Above, Suppose the Original Budget Line Is

question 290

Multiple Choice

-In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will

• A) rotate the budget line to AD.
• B) rotate the budget line to CD.
• C) not move the budget line.
• D) result in a parallel leftward shift of the budget line.

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Definitions:

Hotelling Rule

An economic theory that addresses how the price of non-renewable resources should increase over time under conditions of efficient extraction and market equilibrium.

Marginal Extraction Cost

The additional cost associated with extracting one more unit of a resource.

Treasury Bill

A short-term government security issued at a discount from the par value and pays no interest, maturing in a year or less.

Treasury Bond

Long-term government debt securities with a fixed interest rate and maturity of more than 10 years.