In: Economics
Which one of the following statements about the budget line is false? The budget line is based on fixed income.
A is based on fixed prices.
B Is based on fixed quantities.
C separates affordable consumption points from unaffordable consumption points.
D constrains consumer choices.
Answer: correct answer is B based on fixed quantities .
Budget line is a locus of the various combination of two commodities which can be purchased with given money income and price of the commodity. So that price of the goods can be equivalent to the available income with consumers.and he get the maximum satisfaction. All other option can not be false because consumer have the set of available choices, he can choose. With given money income and prices.