The limit on the consumption bundles that a consumer can afford is known as ?
Correct answer: B. the budget constraint
- A. an indifference curve
- B. the budget constraint
- C. the marginal rate of substitution
- D. the consumption limits
Explanation
The budget constraint identifies the combinations of goods that a consumer can afford given income and prices. An indifference curve instead shows combinations that provide the same level of satisfaction.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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