Question

graphing tutorial
initial budget
new budget
now suppose paolos income is cut in half : that is, he has 50% less money to spend than he did before.
on the previous graph, use the blue line (circle symbols) to plot paolos new budget constraint.
which of the following statements best summarizes the pattern of causality captured by the graph above? check all that apply.
a change in e causes a shift of the budget constraint.
the relationship between s and p is not a causal relationship.
a change in s causes a change in p.
a change in p causes a change in s.

Explanation:

The budget - constraint shifts due to a change in income (E could represent income here). The graph shows the relationship between the quantity of pizza (P) and salad (S), and the budget - constraint shift is caused by an external factor (income change) rather than a change in S causing a change in P or vice - versa. The relationship between S and P on the budget - constraint is one of trade - off given a fixed budget, not a causal relationship in the sense of one directly causing the other to change.

Answer:

A. A change in E causes a shift of the budget constraint.
B. The relationship between S and P is not a causal relationship.