Question

In the following Question, read the following statement and choose the correct alternative among those given below:

Statement 1: Bundles which cost more than consumer’s money income lie outside the budget line. 

Statement 2: Budget Line remains the same even with change in income.

Options

• Both the Statements are true.

• Both the Statements are false.

• Statement 1 is true and Statement 2 is false.

• Statement 2 is true and Statement 1 is false.

Answer 1

Statement 1 is true and Statement 2 is false.

Explanation:

Bundles costing more than the consumer’s income are unaffordable and lie outside the budget line, so Statement 1 is true. A change in income shifts the budget line, so Statement 2 is false.