Every point on a budget constraint represents a point that:
A) gives you the highest marginal utility.
B) is an option that a consumer can choose.
C) is an option that is unattainable.
D) minimizes diminishing marginal utility.

Question

Quizplus · Accepted Answer

A budget constraint represents all the combinations of goods and services that a consumer can afford given their income and the prices of goods, so every point on it is indeed an option that a consumer can choose. Choices A and D relate to concepts of utility maximization and diminishing marginal utility, which are considerations for choosing among the points on the budget constraint, not characteristics of the points themselves. Choice C is incorrect because points on the budget constraint are attainable by definition; points beyond it are unattainable.

Every Point on a Budget Constraint Represents a Point That