A budget constraint
A) represents the bundles of consumption that make a consumer equally happy.
B) refers to the limited amount of income available to consumers to spend on good and services.
C) reflects the desire by consumers to increase their income.
D) shows the prices that a consumer chooses to pay for products he consumes.

Question

Quizplus · Accepted Answer

A budget constraint refers to the limited amount of income available to consumers to spend on goods and services. It represents the various combinations of goods and services that a consumer can afford with their given income and the prices of those goods and services. It reflects the fact that consumers must make trade-offs between different products since they cannot afford to purchase all of the goods and services they desire.

A Budget Constraint