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If income is M and prices are p1 and p2, the budget constraint for bundle (x1, x2) is which inequality?
Ap1x1 + p2x2 > M
Bp1x1 - p2x2 = M
Cp1x1 + p2x2 <= M
Dp1x1 x p2x2 <= M
Answer & Solution
Correct answer: C. p1x1 + p2x2 <= M
Total spending on both goods cannot exceed income, so p1x1 + p2x2 must be at most M.
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