Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

Which of the following are true-
a) A point inside budget line is the point representing two goods that a consumer is capable of consumption given his income.
b) A point outside budget line is unattainable with given current income.
c) Budget line represents the combination of two goods that a consumer is willing and able to consume, given his income and total satisfaction.

Options:

a, b and c

a and b

b and c

c and a

Correct Answer:

a and b

Explanation:

Budget line indicates the combination of all sets of bundles that an individual can buy in his income considering that the cost of each set equals to the income of the consumer. Budget line does not indicate the willingness of individual.