The budget line shows:
A. the amount of product A that a consumer is willing to give up to obtain one more unit of
product B.
B. all possible combinations of two goods that can be purchased, given money income and
the prices of the goods.
C. the minimum amount of two goods that a consumer can purchase with a specific money
income.
D. all possible combinations of two goods that yield the same level of utility to the consumer.
Answer: B
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In a prisoner's dilemma game, each person will pick
A) their best outcome given what the other person will do. B) their best outcome. C) their worse outcome. D) their best outcome after consulting with the other person.
If a firm in a perfectly competitive industry experiences persistent losses, in the long run it should
A) shut down temporarily and wait for market conditions to change. B) continue to operate if it can raise the demand for its product through advertising and quality improvements. C) exit the industry. D) raise its price to cover average total cost.