Question 1 · Microeconomía II UPF 2016

Question 1 (4 points). Proportional shifts in budget constraints

Consider an initial economic scenario where prices are $p_1$ and $p_2$, and Joan has an income of $m$, leading to the budget constraint $m = p_1 x_1 + p_2 x_2$. Suppose that both prices ($p_1$ and $p_2$) as well as her income $m$ double simultaneously. In standard $(x_1, x_2)$-space, what happens to Joan's budget line?