The budget constraint is a function of consumer preferences.

Question

Quizplus · Accepted Answer

Although consumer preferences can influence the goods and services that a consumer chooses to consume, the budget constraint is independent of consumer preferences. The budget constraint is determined by the consumer's income and the prices of the goods and services available in the market. The opposite is true - consumer preferences are a function of the budget constraint. This is because the budget constraint sets limits on the goods and services a consumer can afford, which then influences their consumption choices and ultimately their preferences.

The Budget Constraint Is a Function of Consumer Preferences