Any bundle of goods located inside (versus outside) of a consumers budget constraint: i. is...
Question:
Any bundle of goods located inside (versus outside) of a consumers budget constraint:
i. is unobtainable with the consumers income
ii. implies the consumer is not spending all of her income on goods and services
iii. will yield less utility than any bundle located outside of the budget constraint
iv. will yield less utility than any bundle located on the budget constraint
ii and iii
ii and iv
Budget Constraint:
Budget constraint shows the set of bundles of goods consumer can afford with his available income. In the theoretical concept, a set of bundles of goods is assumed to be just two although, in reality, it could be more.
Answer and Explanation: 1
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View this answerThe answer is ii. implies the consumer is not spending all of her income on goods and services.
Budget constraint shows the set of bundles of goods...
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Utility Maximization: Budget Constraints & Consumer Choice
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