The correct answer is option 2: a and b
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Statement a says that a point inside the budget line represents two goods that a consumer is capable of consuming given his income. This is correct because any point inside the budget line means the consumer is spending less than their total income, so it is affordable but not optimal since they are not utilizing their full budget.
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Statement b says that a point outside the budget line is unattainable with the given current income. This is correct because any point outside the budget line means the consumer does not have enough income to purchase that combination of goods.
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Statement c says that the budget line represents the combination of two goods that a consumer is willing and able to consume, given his income and total satisfaction. This is incorrect because the budget line only represents affordability based on income and prices. It does not account for the consumer’s total satisfaction or utility. A consumer might not be willing to buy all combinations on the budget line, but they can afford them.
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