Budget constraints exist for consumers because
A)their utility from consuming goods eventually reaches a maximum level
B)even with unlimited incomes,they have to pay for each good they consume
C)they have to pay for goods and they have limited incomes
D)prices and income are inversely related
E)demand curves for goods generally slope downward

Question

Quizplus · Accepted Answer

Budget constraints exist because consumers have to pay for goods with their limited incomes. They cannot purchase unlimited amounts of goods due to income limitations, which creates a budget constraint. Option A is incorrect because the utility from consuming goods is not necessarily related to budget constraints. Option B is incorrect because it simply restates the fact that consumers have to pay for goods. Option D is incorrect because income and prices are not directly related to budget constraints. Option E is also irrelevant because demand curves do not necessarily relate to budget constraints.

Budget Constraints Exist for Consumers Because