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Ye Olde Joke Shop has two goods, Good J and Good K. Little Suzie is a prankster in training, and spends her weekly allowance at Ye Olde Joke Shop. Let the following graph be an example of Little Suzie's budget constraint.

What happens to Little Suzie’s budget constraint in the following scenarios?

Created for Albert.io. Copyright 2016. All rights reserved

The price of Good J doubles.
Select Option The budget constraint rotates clockwise around point J.The budget constraint rotates counter-clockwise around point J.The budget constraint rotates clockwise around point K.The budget constraint rotates counter-clockwise around point K.The budget constraint shifts inwards.The budget constraint shifts outwards.The budget constraint does not change.


The price of Good J and Good K double.
Select Option The budget constraint rotates clockwise around point J.The budget constraint rotates counter-clockwise around point J.The budget constraint rotates clockwise around point K.The budget constraint rotates counter-clockwise around point K.The budget constraint shifts inwards.The budget constraint shifts outwards.The budget constraint does not change.


Little Suzie’s allowance doubles.
Select Option The budget constraint rotates clockwise around point J.The budget constraint rotates counter-clockwise around point J.The budget constraint rotates clockwise around point K.The budget constraint rotates counter-clockwise around point K.The budget constraint shifts inwards.The budget constraint shifts outwards.The budget constraint does not change.
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