A budget constraint
A)shows the prices that a consumer chooses to pay for products he consumes.
B)shows the purchases made by consumers.
C)shows the consumption bundles that a consumer can afford.
D)represents the consumption bundles that give a consumer equal satisfaction.

Question

Quizplus · Accepted Answer

A budget constraint shows the combinations of goods and services that a consumer can afford given their limited income and the prices of goods and services in the market. Hence, a budget constraint represents the consumption bundles that a consumer can afford, and not the prices or purchases made by the consumer or the consumption bundles that give the consumer equal satisfaction.

A Budget Constraint