Budget Constraints Exist for Consumers Because

question 526

Multiple Choice

Budget constraints exist for consumers because

• A)their utility from consuming goods eventually reaches a maximum level.
• B)even with unlimited incomes they have to pay for each good they consume.
• C)they have to pay for goods, and they have limited incomes.
• D)prices and incomes are inversely related.

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Definitions:

Industry Supply

The total quantity of a particular good or service that is available for purchase in a market by all producers.

Market Price

The current price at which an asset or service can be bought or sold, determined by the supply and demand forces in the market.

Perfect Competition

A market structure characterized by many sellers and buyers, homogeneous products, and free entry and exit, leading to optimal prices.

Identical Product

Goods that are exactly the same in terms of quality, size, and features, making them perfect substitutes for each other.