Question

Consumers allocate their budgets among bundles because A. bundles are the most efficient way to package goods and services. B. consumers face choices and tradeoffs. C. they want to minimize trips to the store. D. more is not always better.

Answer 1

Answer: B. consumers face choices and tradeoffs.

Explanation: A consumption bundle is given as a combination or a set of goods that a consumer may choose to consume. Consumers are often faced with the decision to make choices and tradeoffs (where an advantage offered by a good necessitates the corresponding loss of another good) between products due to income constraints, regulation or preferences. Consumers therefore allocate their budgets among bundles because they face choices and tradeoffs.