What is a budget constraint quizlet?

What is a budget constraint quizlet?

Budget Constraint. The different combinations of goods a consumer can afford with a limited budget, at given price.

Which is the budget constraint?

The budget constraint is the boundary of the opportunity set—all possible combinations of consumption that someone can afford given the prices of goods and the individual’s income. Opportunity cost measures cost in terms of what must be given up in exchange.

What is the consumer budget line quizlet?

A consumer’s budget line shows the limits to what a consumer can buy. affordable and unaffordable consumption combinations. only the good measured on the y-axis. affordable combination of sodas and DVDs that does not spend the entire budget.

What is a budget set quizlet?

Budget Set. a consumers budget set is the set of affordable combinations of two goods. the budget set includes the budget line-combinations that exhaust the budget-as well as combinations that cost less than the consumer has to spend, leaving the consumer with leftover money.

What happens to a budget constraint when income increases quizlet?

An increase in income will shift the budget line upward (and rightward). A decrease in income will shift the budget line downward (and leftward).

When you have an increase in income your budget constraint quizlet?

When the income increases, the budget line shifts outwards. When the income decreases, the budget line shifts inwards. What happens to the budget line if the price of one good changes but the price of the other does not?

Why is budget a constraint?

A budget constraint occurs when a consumer is limited in consumption patterns by a certain income. When looking at the demand schedule we often consider effective demand. Effective demand is what people are actually able to spend given their limitations of income.

What is budget constraint with example?

A budget constraint is an economic term referring to the combined amount of items you can afford within the amount of income available to you. For example, if you are a sales professional with a $1,000 budget for promotional items, this sets the upper limit on items you can purchase.

When a consumer’s budget increases the budget line quizlet?

D) If the consumer’s budget (income) increases, the budget line shifts leftward and its slope does not change. You just studied 10 terms!

When a consumer’s budget increases the budget line?

Figure 10.4 shows the effects of changes in a consumer’s budget. The slope of the budget line doesn’t change because prices have not changed. An increase in the budget shifts the budget line rightward.

How does a consumers budget set differ from his budget constraint?

How does a consumer’s budget set differ from his budget constraint? A budget set refers to all the possible bundles of goods and services a consumer can purchase, while a budget constraint is limited to the bundles he can purchase using all of his income.

What is a consumption point inside the budget line?

Any point inside the budget line indicates that it is possible to afford but has spent unspent income.