A budget constraint: A. indicates the marginal rate of substitution. B. indicates the limited amount of income available to consumers to spend on goods and services. C. shows the rate at which a consumer would be willing to trade off one good for another. D. shows the combinations of consumption bundles that give the consumer the same utility. E. shows the change in total utility a consumer receives from consuming one additional unit of a good or service.

Question

Charlotte

Social Studies

10 February, 03:57

A budget constraint: A. indicates the marginal rate of substitution. B. indicates the limited amount of income available to consumers to spend on goods and services. C. shows the rate at which a consumer would be willing to trade off one good for another. D. shows the combinations of consumption bundles that give the consumer the same utility. E. shows the change in total utility a consumer receives from consuming one additional unit of a good or service.

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Answers (1)

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Sophia Vasquez · Answer 1

Answer: Option (B) is correct

Explanation:

In dismal science, budget constraint tends to represent all combinations of commodities and services which an individual may buy given the current prices persisting in market and his/her respective income. Consumer theory tends to use this particular concept of budget constraint in order to analyze and evaluate consumer choices. In other words, it shows the amount of income that is available to an individual to spend on commodities and other services.