A consumer has to choose the optimal amount of cheese and crackers to purchase. He or she has drawn his or her budget constraint (BC) and indifference curves on a graph with the amount of cheese (in ounces) on the horizontal axis and the amount of crackers (in packages) on the vertical axis. Which of the following statements is true if the price of crackers declines? The BC shifts to the left (down). o The BC shifts to the right (up). O The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a lower point. O The BC rotates such that it intersects the horizontal axis at the same point as before and intersects the vertical axis at a higher point.

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Equilibrium Price and Quantity

Equilibrium refers to a state of balance that comes about because there is equality in all forces.