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19 December, 14:00

Which of the following statements is correct?

A) Consumers have the ability to buy everything they desire.

B) A consumer's budget line shows the limits to what a consumer can buy.

C) A consumer's budget line shows the goods with the highest marginal utilities.

D) Rich consumers are unaffected by prices.

E) A budget line changes only if the person's budget changes.

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Answers (1)
  1. 19 December, 15:58
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    Correct option is B.

    A budget line shows the limits to what a consumer can buy

    Explanation:

    In economics, a budget line represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyse consumer choices.
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