difference between budget set and budget constraint? (3 marks)
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A budget set represents those combinations of consumption bundles that are available to the consumer given his/her income level and at the existing market prices. On the other hand, budget constraint implies that the total amount spent on two goods together should be less than or equal to his/her given income level
A budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices.
A budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices.
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Explanation:
A budget set represents those combinations of consumption bundles that are available to the consumer given his/her income level and at the existing market prices. On the other hand, budget constraint implies that the total amount spent on two goods together should be less than or equal to his/her given income level.
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