The limit on the consumption bundles that a consumer can afford is known as
A) an indifference curve.
B) the budget constraint.
C) the marginal rate of substitution.
D) the consumption limit.

Question

Quizplus · Accepted Answer

The limit on the consumption bundles that a consumer can afford is known as the budget constraint. Option A, indifference curve, refers to the curve that shows all combinations of two goods that give the consumer the same level of satisfaction. Option C, marginal rate of substitution, refers to the rate at which a consumer is willing to trade one good for another at the margin. Option D, consumption limit, is not a commonly used term in economics.

The Limit on the Consumption Bundles That a Consumer Can