The budget line shows the boundary between those combinations of goods and services that
A)have positive marginal utility and those that have negative marginal utility.
B)are available and those that are unavailable.
C)are desirable and those that are undesirable.
D)are affordable and those that are unaffordable.
E)are normal goods and those that are inferior goods.

Question

Quizplus · Accepted Answer

The budget line represents the different combinations of two goods that can be purchased with a given budget constraint. It shows the boundary between what is affordable (the combinations of goods lying on or below the budget line) and what is unaffordable (the combinations of goods lying above the budget line). Therefore, the correct answer is D: the budget line represents those combinations of goods and services that are affordable and those that are unaffordable.

The Budget Line Shows the Boundary Between Those Combinations of Goods