Asked by Melody Martenson on Jul 06, 2024

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Verified

Michael can buy either pizzas or submarine sandwiches. If the prices of pizzas and submarine sandwiches double and Michael's money income triples, 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.

Budget Constraint

The limit on the consumption bundles that a consumer can afford to purchase with a limited amount of income.

Submarine Sandwiches

A type of sandwich consisting of a long roll of bread filled with meats, cheese, vegetables, and condiments, also known as a sub, hoagie, hero, or grinder.

Pizzas

A popular dish of Italian origin consisting of a flat round base of dough baked with a topping of tomato sauce and cheese, typically with added meat, fish, or vegetables.

  • Familiarize with the concept of budgetary limits and the effect that income and price adjustments have on consumer selection.
  • Examine the dynamics through which changes and transitions in the budget constraint represent economic realities, including fluctuations in financial status, price shifts, and the substitution effect.
verifed

Verified Answer

AB
Adrian BakshJul 08, 2024
Final Answer :
B
Explanation :
When the prices of goods double and income triples, the budget constraint shifts outward because Michael can now buy more of both goods than before, even though the prices have increased. The budget line remains parallel because the relative price of pizzas to submarine sandwiches remains the same.