What does a budget constraint show
A)the prices that a consumer chooses to pay for products he consumes
B)the consumption bundles that are offered by the producer
C)the consumption bundles that a consumer can afford
D)the bundles of consumption that makes a consumer equally happy

Question

Quizplus · Accepted Answer

A budget constraint shows the different combinations of two goods that a consumer can afford given their budget and the prices of the goods. It shows the limit of what a consumer can purchase, given their income and the price of goods. So, option C is correct because it indicates the consumption bundles that a consumer can afford. Options A, B, and D are incorrect as they do not accurately describe the purpose of a budget constraint.

What Does a Budget Constraint Show