Which of the following shows the feasible combinations of two goods that a consumer could afford given her money income?
A) the budget constraint
B) the indifference map
C) the income consumption curve
D) the price consumption curve

Question

Quizplus · Accepted Answer

The budget constraint shows the different combinations of two goods that a consumer can afford given her money income at a given set of prices. It plots the total consumption expenditure on the horizontal axis and the quantity of one of the goods on the vertical axis, given the quantity of the other good purchased. Therefore, the budget constraint is the relevant tool to determine the feasible consumption possibilities of a consumer given her income and the prevailing market prices. The indifference map illustrates the consumer's preferences among different combinations of goods, while the income and price consumption curves depict how a change in income or price affects the consumer's consumption behavior.

Which of the Following Shows the Feasible Combinations of Two