A consumer that doesn't spend all of her income
A)would be at a point outside of her budget constraint.
B)would be at a point inside her budget constraint.
C)must not be consuming positive quantities of all goods.
D)must be consuming at a point where her budget constraint touches one of the axes.

Question

Quizplus · Accepted Answer

If a consumer doesn't spend all of her income, then she must be consuming less than what she can afford according to her budget constraint. This means that she is at a point inside her budget constraint, where she could potentially consume more of both goods if she chooses to. Answer A is incorrect because if the consumer is outside her budget constraint, that means she is spending more than her income allows, and this is not the scenario described in the question. Answer C is also incorrect because we don't have enough information to determine if the consumer is consuming positive quantities of all goods or not. Answer D is incorrect because the fact that the consumer is not spending all her income doesn't necessarily mean that she is at a point where her budget constraint touches one of the axes.

A Consumer That Doesn't Spend All of Her Income