All attainable combinations of good X and good Y are the budget line.

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above

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below

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on and below

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Solution

The correct option is D on and below
All attainable combinations of good X and good Y are on and below the budget line. Any combination above and beyond the budget line is not affordable for the consumer.

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Similar questions

A consumer wants to consume two goods. The prices of the two goods are Rs. 4 and Rs. 5 respectively. The consumer's income is Rs. 20.

(i) Write down the equation of the budget line.

(ii) How much of good 1 can the consumer consume if she spends her entire income on that good?

(iii) How much of good 2 can she consume if she spends her entire income on that good?

(iv) What is the slope of the budget line ?

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