Which one of the following statements about the budget line is false? The budget line
A)separates affordable consumption points from unaffordable consumption points.
B)is based on fixed prices.
C)is based on fixed income.
D)is based on fixed quantities.
E)constrains consumer choices.

Question

Quizplus · Accepted Answer

The budget line is not based on fixed quantities. It shows different combinations of two goods that a consumer can purchase with a given fixed income at prevailing market prices. The quantities purchased of each commodity depend on the prices of the commodities and the consumer's preferences.

Which One of the Following Statements About the Budget Line