Michael can buy either pizzas or submarine sandwiches. If the prices of pizzas and submarine sandwiches double and so does Michael's money income, we can conclude that Michael'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 doubled.
D) remain unchanged.

Question

Quizplus · Accepted Answer

When both the prices of goods and Michael's income double, the budget constraint remains unchanged because the relative prices and purchasing power remain the same.

Michael Can Buy Either Pizzas or Submarine Sandwiches