Question

26. What is budget set? Explain what can lead to
change in budget set?​

Answer 1

Answer:

A budget set refers to all those quantities of two goods that a consumer can buy, given the prices of the goods and his money income. Its equation is given by:

P1.X1 + P2.X2 <= M

A budget set can change when:

The money income of a consumer changes. If money income increases, a consumer can buy more of both goods. The reverse happens if money income decreases.

The prices of the goods change. At higher prices, less quantity of a good can be bought and hence the consumer preference will change. Correspondingly, the expenditure on the good whose price has changed will also change and the budget set will get changed.

Explanation:

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Answer 2

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What is budget set? Explain what can lead tochange in budget set?

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A budget set can change when: The money income of a consumer changes. If money income increases, a consumer can buy more of both goods. ... Correspondingly, the expenditure on the good whose price has changed will also change and the budget set will get changed A budget set or opportunity set includes all possible consumption bundles that someone can afford given the prices of goods and the person's income level. The budget set is bounded above by the budget line.A budget set or a set of opportunities incorporates all feasible utilisation bundles that someone can manage provided the cost of commodities and the person's earning degree. ... All those bundles that give content to these norms are set to structure a part of what is known as the budget set.

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