When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:

• A. is purchasing goods at their equilibrium prices
• B. is violating the law of demand
• C. is maximizing her utility
• D. is spending no more than her available income

Answer: (D)

Verified step by step guidance

1. Understand the concept of a budget line: It represents all combinations of two goods that a consumer can purchase given their income and the prices of the goods. The budget line equation is \(\text{Income} = P_x \times Q_x + P_y \times Q_y\), where \(P_x\) and \(P_y\) are prices of goods \(x\) and \(y\), and \(Q_x\) and \(Q_y\) are quantities of those goods.
2. Recognize that choosing a combination of goods on or within the budget line means the consumer is spending an amount that is less than or equal to their total income. This ensures the consumer does not exceed their budget constraint.
3. Note that purchasing on the budget line means spending exactly the available income, while purchasing inside the budget line means spending less than the available income.
4. Understand that this choice does not necessarily imply utility maximization or equilibrium prices; it simply reflects the consumer's adherence to their budget constraint.
5. Therefore, the correct interpretation is that the consumer is spending no more than their available income when choosing combinations within the budget line.