A Budget Constraint

question 122

Multiple Choice

A budget constraint:

• A) shows different bundles of goods that all yield the same total utility.
• B) shows different bundles of goods that all cost the same amount.
• C) shows different bundles of goods that all maximize an individual's utility.
• D) shows how much income is needed to maximize total utility.

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Definitions:

Total Variable Cost

The total of all expenses that vary with the level of output or production, including costs for materials and labor.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output.

Total Revenue

The overall amount of money generated by a firm from its sales activities before any expenses are subtracted.

Marginal Cost Curve

It illustrates the change in total cost that arises when the quantity produced is incremented by one unit; this is the cost of producing one additional unit of a good.