Question

A straight budget line (budget constraint) shows increasing opportunity costs.

a. True
b. False

Answer 1

False. A straight budget line represents constant opportunity costs, meaning that the tradeoff between the two goods remains the same as the consumer purchases more of one good and less of the other.

Step-by-step explanation:

A budget constraint, also known as a budget line, shows the possible combinations of two goods that are affordable given a consumer's limited income.

A straight budget line represents constant opportunity costs, meaning that the tradeoff between the two goods remains the same as the consumer purchases more of one good and less of the other.

Therefore, the statement that a straight budget line shows increasing opportunity costs is false.