Consider a consumer who maximizes utility subject to a budget constraint. If her income increases, then:

Question

A. the budget constraint will shift inward, the consumer will move to a new equilibrium along a lower indifference curve, and the level of total utility will increase

 

B. the budget constraint will shift outward, the consumer will move to a new equilibrium along a lower indifference curve, and the level of total utility will increase

 

C. the budget constraint will shift outward, the consumer will move to a new equilibrium along a higher indifference curve, and the level of total utility will decrease

 

D. the budget constraint will shift outward, the consumer will move to a new equilibrium along a higher indifference curve, and the level of total utility will increase

 

E. the budget constraint will shift outward, the consumer will move to a new equilibrium along a lower indifference curve, and the level of total utility will decrease

Answer 1

D. the budget constraint will shift outward, the consumer will move to a new equilibrium along a higher indifference curve, and the level of total utility will increase