A line representing all the possible combinations of two commodities that a consumer can purchase at a particular time, given the market prices of the commodities and the consumer's income, is a(n):
A) budget line.
B) consumption line.
C) income consumption curve.
D) indifference curve.

Question

Quizplus · Accepted Answer

A budget line represents the different combinations of two commodities that a consumer can purchase with a certain level of income and given market prices. It is also called a budget constraint or price line. The other options are not correct: a consumption line is not a well-known economic concept, an income consumption curve represents changes in consumption due to changes in income (not prices), and an indifference curve shows combinations of goods that provide the same level of utility to a consumer.

A Line Representing All the Possible Combinations of Two Commodities