Question

What does a consumer budget consist?

• A. Some bundles in the positive quadrant which are on or below the budget line
• B. All bundles in the negative quadrant which are on or below the budget line
• C. All bundles in the positive quadrant which are on or above the budget line
• D. All bundles in the positive quadrant which are on or below the budget line

Answer 1

Answer: (D)

All bundles in the positive quadrant which are on or below the budget line

A consumers budget is all the goods and services a consumer can purchase at given prices with his current income. A better way to understand this would be to term consumer budget as budget constraint. Budget constraint along with a preference map helps us analyse consumer behavior.