Question

1. How to prepare a buget set suppose your income is RS 10 . prepare different budget set?​

Answer 1

Answer:

A budget line represents the different combinations of two goods that are affordable and are available to a consumer; while being aware of his/her income-level and market prices of both the goods.

Let x1 be the amount of good 1.

x2 be the amount of good 2.

P1 be the price of good 1.

P2 be the price of good 2.

P1x1 = Total money spent on good 1

P1x2 = Total money spent on good 2

Then, the budget line will be:

P1x1 + P2x2 = M

All the consumption bundles on the budget line cost the consumer exactly the equivalent of hi/her income.