In a usual week, Karl spends $20 to buy bagels and coffee. This week Karl has $25 to spend. Which of the following statements is correct?

Question

Accepted Answer

Karl's budget line shifts outward, and the relative price of a bagel in terms of coffee does not change.

Answer

Karl's consumption point when his income was $20 is on his new budget line.

Answer

Karl's budget line becomes either steeper or less steep, depending on which good is measured on the  x -axis.

Answer

The relative price of a bagel in terms of coffee increases if Karl buys more bagels and less coffee.

Answer

The relative price of a bagel in terms of coffee decreases if Karl buys more bagels and less coffee.

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