A line that represents combinations of two goods that a consumer can purchase with a fixed income and given price for each good is called the:
A) indifference curve.
B) demand curve.
C) budget line.
D) money line.

Question

Quizplus · Accepted Answer

A budget line shows all the combinations of two goods that a consumer can afford to purchase with a fixed income and given prices for each good. Indifference curves represent the different levels of satisfaction a consumer receives from consuming different combinations of two goods, but they do not take into account the consumer's budget constraint. A demand curve shows the quantity of a good that consumers are willing and able to purchase at different prices, but again, it does not take into account the consumer's budget constraint. A money line is not a commonly used economic term.

A Line That Represents Combinations of Two Goods That a Consumer