Which of the following statements is true? (i) consumers cannot consume at points outside their budget constraint
(ii) optimising consumers spend half of their income on each of two goods
(iii) consumers can consume at points inside their budget constraint
A) (i) only
B) (i) and (ii)
C) (i) and (iii)
D) (ii) and (iii)

Question

Quizplus · Accepted Answer

Statement (i) is true because a consumer can only afford to purchase goods and services within the limits of their budget constraint.
Statement (ii) is not necessarily true as it depends on the consumer's preferences and the prices of the two goods.
Statement (iii) is also true because a consumer can choose to consume at any point within their budget constraint, including points inside it.

Which of the Following Statements Is True? (I) Consumers Cannot