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Consumer Choice Budget Constraint â— People face tradeoffs â—‹ Can use income on one good or another â—‹ Fixed income = budget constraint â—‹ All combinations of two goods (consumption package) a consumer can potentially purchase with their income â—‹ (P1xQ1) + (P2xQ2) = Income â– P = price, Q = Quantity â—‹ â—‹ A point to the right of the budget constraint represents a consumption package unaffordable to the consumer
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