Question

consumption choices and behavioral economics wednesday by 11:59pm points 100 submitting an external tool question a budget constraint curve for fast food and everything else is shown above in the figure. if the current utility - maximizing choice is labeled m and the price of fast food decreases, which of the following could be the location of the new utility - maximizing choice?

Explanation:

Step1: Understand price - quantity relationship

When the price of fast - food decreases, the budget constraint curve pivots outward along the fast - food axis. Consumers can afford more fast - food for the same amount of income.

Step2: Analyze utility - maximizing choice

The new utility - maximizing choice will be on a higher indifference curve tangent to the new budget constraint. Since fast - food has become relatively cheaper, the consumer will consume more fast - food. Point C is to the right of point M (the original utility - maximizing choice), indicating more fast - food consumption.

Answer:

C