Question

Michael can buy either pizzas or submarine sandwiches. If the prices of pizza and submarine sandwiches double and​ Michael's money income​ triples, we can conclude that​ Michael's budget constraint will

Answer 1

We can conclude that​ Michael's budget constraint will shift out but remain parallel to the old one.

Step-by-step explanation:

The ability of a person in spending a unit of money in purchasing a product r devices refers to the purchasing ability of that person. Purchasing power determines the quantity if goods and services that can be purchased by the individuals of an economy. The main factor that determines the purchasing power of an individual is the inflation rate.

In the given example, the ability of Michel in purchasing pizzas or submarine sandwiches is explained. When the pizza and submarine sandwiches prices gets doubled, the income of Michel triples. From this we can conclude that Michael's budget constraint will shift out but remain parallel to the old one.