Asked by Erika Cheng on May 16, 2024
Verified
Refer to Figure 6.2. Mr. Lingle's budget constraint is AC. His choice set is all points
A) in the area bounded by OAC.
B) to the right of budget constraint AC.
C) along budget constraint AC.
D) along the vertical and horizontal axes.
Budget Constraint
Refers to the limitations on the consumption choices of individuals based on their income and the prices of goods and services.
Choice Set
A set of all possible options available to a consumer from which he or she can make a selection.
Area
In a geographical or economic context, can refer to a specified region or domain under consideration for its characteristics or resources.
- Determine the sets of options and points of consumption situated on or limited by a budgetary constraint.
Verified Answer
AM
Austin MurrayMay 20, 2024
Final Answer :
A
Explanation :
The choice set for Mr. Lingle includes all points within the area bounded by OAC because it represents all combinations of goods he can afford given his budget constraint. Points along and inside the budget line are feasible options.
Learning Objectives
- Determine the sets of options and points of consumption situated on or limited by a budgetary constraint.