Referto Figure 51 In which graph does shift from ELI to BL2

Referto Figure 5.1. In which graph does shift from ELI to BL2 represent an increase in the price of DVDs? Books Books BL2 BL1 BL1 BL2 DVDs DVDs Books Books BL1 BL2 BLI BL2 DVDs DVDs

Solution

Graph C

When the price of DVDs is increased the consumer is able to buy only fewer quantities of DVDs. Now this implies that if the consumer is able to spend all his income in buying DVDs, the intercept on the horizontal axis will shift inwards reflecting reduced number of affordable bundles with the given unchanged income. There is no change in price of Books or the income so vertical intercept remains unchanged.