The individual's budget constraint is _____.
A)the amount of money she has in the bank
B)determined by dividing the individuals income by the price of the goods she wants to buy
C)the maximum amount one good she can consume given her consumption of other goods
D)a line depicting all the possible budgets an individual could have at various occupations

Question

Quizplus · Accepted Answer

The individual's budget constraint represents the maximum amount she can consume of one good given her consumption of other goods, which is option C. Option A is incorrect because the amount of money in the individual's bank does not necessarily reflect her budget constraint, as she may have other financial obligations or constraints. Option B is incorrect because it only represents the affordability of a single good, while budget constraint considers the consumption of multiple goods. Option D is incorrect because the budget constraint is not determined by occupation but by an individual's income and preferences.

The Individual's Budget Constraint Is _____