If the consumer's income and all prices simultaneously double, then the optimum consumption bundle will
A)shift outward relative to the original optimum.
B)move leftward along the original budget constraint.
C)not change.
D)shift inward relative to the original optimum.

Question

Quizplus · Accepted Answer

When both income and prices double, the budget constraint also doubles, thus keeping the slope and intercept of the budget constraint constant. As a result, the optimum consumption bundle remains the same and there is no need for any adjustments.

If the Consumer's Income and All Prices Simultaneously Double, Then