A budget constraint shows
A) all of the combinations of sets of goods that yield the same level of satisfaction.
B) all of the possible combinations of goods that can be purchased with a specific budget.
C) all of the goods the consumer gets positive marginal utility from when the goods are consumed.
D) all of the goods that a consumer substitutes for other goods when prices fall.

Question

Quizplus · Accepted Answer

A budget constraint shows all of the possible combinations of goods that can be purchased with a specific budget. It illustrates the limitations of the consumer's purchasing power and the trade-offs that must be made when selecting goods to purchase.

A Budget Constraint Shows