The budget line shows
A) the amount of product X that a consumer is willing to give up to obtain one more unit of product Y.
B) all possible combinations of two goods that can be purchased, given money income and the prices of the goods.
C) the minimum amount of two goods that a consumer can purchase with a specific money income.
D) all possible combinations of two goods that yield the same level of utility to the consumer.

Question

Quizplus · Accepted Answer

The budget line shows all possible combinations of two goods that can be purchased, given money income and the prices of the goods. It sets the limit on the affordable combinations of two goods, which can either be on the line or inside it based on the income and price changes. Thus, choice B is the correct answer.

The Budget Line Shows