A budget line:
A) shows all the combinations of goods that yield the same (utility) level of satisfaction.
B) shows all the combinations of goods that require the same total expenditure.
C) has a slope that depends on consumer's income
D) slopes upwards

Question

Quizplus · Accepted Answer

A budget line shows all the combinations of goods that require the same total expenditure. It represents the limit of what a consumer can afford to buy with their income and the prices of the goods they want to purchase. The slope of the budget line depends on the prices of the goods but not on the consumer's income. The budget line can slope upwards or downwards depending on the relative prices of the two goods. However, it does not show utility levels of satisfaction.

A Budget Line