
Figure 5.12 Fall in the Price of an Inferior Good
When the price of ramen noodles decreases, Judi’s budget constraint rotates outward from
BC1 to
BC2. The total effect of this price change is represented by the increase in quantities consumed from the original utilit
y-maximizing bundle A to bundle B. Overall, Judi’s consumption of both ramen noodles and steak increases.