Assume Initially That the Price of X (Measured on the Horizontal

question 9

Multiple Choice

Assume initially that the price of X (measured on the horizontal axis) is $9 and the price of Y (measured on the vertical axis) is $4.If the price of X now declines to $6,the budget line will:

• A) be unaffected.
• B) shift outward on the vertical axis.
• C) shift inward on the horizontal axis.
• D) shift outward on the horizontal axis.

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Definitions:

Present Value Table

A table used to calculate the present value of a future amount of money or stream of cash flows given a specific discount rate.

Present Value of $1

The current worth of a single dollar to be received in the future, discounted at a specific interest rate.

Borrowed Asset

An asset that is temporarily acquired from another party under a loan agreement, to be returned after a specified period or upon fulfilling certain conditions.

Ordinary Annuity

A series of equal payments made at the end of consecutive periods over a fixed length of time.