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Question 8
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Marge also buys hamburgers for and root beer for . She has income of . Her budget constraint will experience a parallel outward shift if

A) the price of hamburgers falls to , the price of root beer falls to , and her income falls to .
B) the price of hamburgers rises to , the price of root beer rises to , and her income remains the same.
C) the price of hamburgers falls to , the price of root beer falls to , and her income rises to .
D) the price of hamburgers rises to , the price of root beer rises to , and her income rises to .

Ask by French Wheeler. in the United States
Mar 30,2025

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The correct answer is C) the price of hamburgers falls to , the price of root beer falls to , and her income rises to .

Solución

To determine which option causes a parallel outward shift in Marge’s budget constraint, we need to understand that a parallel outward shift occurs when the purchasing power increases, allowing her to buy more of both goods without changing their relative prices.
Now, let’s analyze each option:
A) The price of hamburgers falls to , the price of root beer falls to , and her income falls to .
  • This option decreases both prices but also decreases income, which does not lead to a parallel outward shift.
B) The price of hamburgers rises to , the price of root beer rises to , and her income remains the same.
  • This option increases the prices without increasing income, which does not lead to a parallel outward shift.
C) The price of hamburgers falls to , the price of root beer falls to , and her income rises to .
  • This option decreases the prices and increases income, which can lead to a parallel outward shift.
D) The price of hamburgers rises to , the price of root beer rises to , and her income rises to .
  • This option increases income but also increases prices, which does not lead to a parallel outward shift.
Based on this analysis, option C is the only one that results in a parallel outward shift in the budget constraint.

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Extra Insights

If Marge’s budget constraint experiences a parallel outward shift, it means that she can now afford to buy more of both hamburgers and root beer without changing their prices. Therefore, we need a scenario where her income increases while the prices remain the same or decrease.
Option C describes a situation where the price of hamburgers falls to , the price of root beer falls to , and her income rises to . Here, the decrease in prices and the increase in income allow Marge to buy more of both goods, effectively shifting her budget constraint outward.
So, the answer is: C) the price of hamburgers falls to , the price of root beer falls to , and her income rises to .

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