Question

() A budget set is the collection of all bundles
of goods that a consumer wants to buy. Is it
true or false ?Give reason ? (2 marks )
(ii) A consumer would equate price of a
commodity with its marginal utility, not with
total utility. Give reason to support your
answer. (2 marks )​

Answer 1

Explanation:

Budget set is the collection of all bundles of goods that a consumer can buy with his income at the prevailing market prices. Answer: Budget line is a graphical representation which shows all the possible combinations of the two goods that a consumer can buy with the given income and prices of commodities.