Asked by Kiauna Floyd on May 01, 2024
Verified
If all prices are doubled and money income is left the same, the budget set does not change because relative prices do not change.
Budget Set
The collection of all possible bundles of goods and services that a consumer can afford with their income at given prices.
Prices Doubled
A situation where the cost of goods, services, or commodities increases to twice their original amount.
Relative Prices
The price of one good or service compared to another, usually considered in terms of opportunity cost.
- Analyze how shifts in pricing impact a person's budgetary framework and options for consumption.
Verified Answer
DW
davin williamsMay 02, 2024
Final Answer :
False
Explanation :
Doubling all prices while keeping money income the same reduces the quantity of goods and services that can be purchased, effectively shrinking the budget set, even though relative prices remain unchanged.
Learning Objectives
- Analyze how shifts in pricing impact a person's budgetary framework and options for consumption.