Assume that a consumer purchases only two products. Suppose that the consumer's money income doubles, and the prices of the two products also double. These changes in income and prices will result in:
A) A shift of the budget line inward to the left
B) A shift of the budget line outward to the right
C) No change in the budget line
D) An increase in the slope of the budget line

Question

Quizplus · Accepted Answer

Since the prices of the two products and the income have doubled, the ratio of the prices to the consumer's income remains the same. As a result, the budget line will not shift, but will have the same slope and intercepts. Therefore, there will be no change in the budget line.

Assume That a Consumer Purchases Only Two Products