The budget constraint defines the set of baskets that a consumer can purchase with a specific level of income.

Question

Quizplus · Accepted Answer

This statement is true. The budget constraint represents the combinations of goods and services that a consumer can afford given their income and the prices of those goods and services. The budget constraint is defined as the set of all possible combinations of goods and services that a consumer can purchase with their given income and the prevailing prices of goods and services in the market.

The Budget Constraint Defines the Set of Baskets That a Consumer