Robert earns income of $30 per week which he spends entirely on video rentals and gasoline. The price of gasoline is $1.50 per gallon and the price of a video rental is $3.00. Suppose the price of both gasoline and video rental doubles to $3.00 per gallon and $6.00 per video rental. Which of the following will occur assuming that nothing else changes?
A. The opportunity cost of a video rental will increase for Robert
B. The opportunity cost of a video rental will decrease for Robert
C. The effect of price increases on Robert's weekly budget line will be equivalent to a reduction in his weekly money income to $15
D. The effect of the price increases on Robert's weekly budget line will be equivalent to an increase in his weekly money income to $60.
Answer: C