alleryA point lying inside (below) the budget line indicates that the consumer is:
Aspending beyond his money income
Bunder-spending his money income
Cexactly exhausting his income
Dearning more than he spends
Answer & Solution
Correct answer: B. under-spending his money income
1. Points on the budget line use up the entire income.
2. A point inside the line costs less than the income, so it reflects under-spending.
3. Points beyond the line are unaffordable, and a point inside is not full exhaustion of income, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.19_
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