Question

Which of the following does the budget constraint alone not indicate?

1) i. the various combinations of goods and services an individual consumer may purchase
2) ii. the utility maximizing bundle of goods and services a consumer will purchase
3) iii. how the prices of the goods and services were determined
4) Cannot be determined from the budget constraint alone

Answer 1

The budget constraint alone does not indicate how the prices of the goods and services were determined.

Step-by-step explanation:

The budget constraint alone does not indicate how the prices of the goods and services were determined. The budget constraint represents the various combinations of goods and services an individual consumer may purchase and the utility maximizing bundle of goods and services a consumer will purchase. However, it does not provide any information about how the prices of these goods and services are determined.