All points that lie on the budget constraint cost the same amount of money.

Question

Quizplus · Accepted Answer

This statement is true by definition. The budget constraint represents all possible combinations of two goods that a consumer can purchase given their income and the prices of the goods. Therefore, all points on the budget constraint have the same total cost, which is equal to the income of the consumer. The budget constraint represents all the combinations of goods that can be purchased with a certain amount of money. Since all the points on the budget constraint represent the same amount of money spent, they also cost the same amount of money. Therefore, the statement is true.

All Points That Lie on the Budget Constraint Cost the Same