Question

Every consumption bundle on the budget constraint

Group of answer choices

costs the same amount

has the same marginal rate of substitution

provides the same utility

is utility maximizing

Answer 1

Answer..........a. costs the same amount

Explanation: A budget constraint represents the different combinations of the two goods, that can be purchased by the consumers ( under the consumer's income ) . On the budget constraint ( line) each combination exhausts consumer's entire income. Let P1=2 , P2 = 5 and consumer's income (m)=50 , then bundle which will lie on budget line are (0 , 10 ) , ( 5, 8 ) , ( 10 , 6 ) , ( 20, 2 ) ... ..... etc . These all combination of two goods, good 1 and good 2 lie on the budget constraint and costs the same amount (50 ) .