Algebraically, the budget constraint for two goods would be PₓQₓ + PᵧQᵧ is:
A) equal to B.
B) less than B.
C) greater than B.
D) less than or equal to B.

Question

Quizplus · Accepted Answer

The budget constraint represents the total amount of money (B) that can be spent on the two goods, where Pₓ and Pᵧ are the prices of the two goods and Qₓ and Qᵧ are the quantities of the two goods purchased. Therefore, PₓQₓ + PᵧQᵧ ≤ B since the total cost of the goods cannot exceed the budget. Thus, the correct choice is D.

Algebraically, the Budget Constraint for Two Goods Would Be PₓQₓ