A budget line is constructed to show
A) how consumers who budget their expenditures achieve more satisfaction than those who do not.
B) the set of all baskets that the consumer can afford,given prices and his or her income.
C) the set of all baskets that the consumer would be willing to purchase given various prices for the goods in the basket.
D) the set of all baskets that the consumer considers equally desirable.

Question

Quizplus · Accepted Answer

A budget line shows the combination of goods that a consumer can afford given their income and the prices of the goods. It does not necessarily indicate which basket of goods the consumer would prefer or find equally desirable, only those that fall within their budget constraint.

A Budget Line Is Constructed to Show