Question

What does a budget line represent for a consumer?

Options

• All possible combinations of two goods, regardless of income

• Combinations of two goods affordable at given income and prices

• Only one combination that a consumer can buy

• The total price of all goods in the market

Answer 1

Combinations of two goods affordable at given income and prices

Explanation: 

A budget line shows all combinations a consumer can afford given their income and the prices of two goods.