Carlos can buy either sushi or eggrolls. If the prices of sushi and eggrolls triple and so does Carlos's money income, we can deduce that Carlos's budget constraint will
A) shift in but remain parallel to the old one.
B) shift out but remain parallel to the old one.
C) swivel in so that the slope of the budget constraint is tripled.
D) remain unchanged.

Question

Quizplus · Accepted Answer

When both the prices of goods (sushi and eggrolls) and Carlos's money income triple, the relative price of the goods (the ratio of the price of sushi to the price of eggrolls) remains the same, and Carlos's ability to purchase these goods in terms of quantity also remains unchanged. Therefore, his budget constraint, which represents the combination of goods he can purchase, will remain unchanged.

Carlos Can Buy Either Sushi or Eggrolls