The budget constraint shows the combinations of goods that generate the same amo

Question

The budget constraint shows the

combinations of goods that generate the same amount of total satisfaction.

amount of a good the consumer will buy at various prices.

possible combinations of goods that can be purchased with a specified income.

n

combinations of goods that generate the same amount of total satisfaction.

amount of a good the consumer will buy at various prices.

possible combinations of goods that can be purchased with a specified income.

changes in consumption of goods that a consumer makes when his income increases.

n

Explanation / Answer

Possible combinations of goods that can be purchased with a specified income.

Note that a budget constraint is constrained by the income of the buyer and provides the affordable bundles that are either income exhausting or leave savings

Q4

Demand is downward sloping so MR = MC will result in profit maximizing output which is Q4.

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