Question

Explain consumer's budget?

Answer 1

In Microeconomics,consumer's budget implies the overall purchasing capacity or power of a consumer based on a certain level of personal wealth or income and the respective prices of various goods and services that he or she buys.

Explanation:

Consumer's budget basically refers to the allocation of consumer income or wealth to purchase or buy various goods and services based on their respective market values or prices.In simple terms,a rational consumer plans his or her money expenditure on various goods and services that he or she demands based on the consumer wealth or income,which is the main and primary source of expenditure,and the respective prices of goods and services which he or she will purchase with his/her money income.Hence,the consumer plans and allocates his expenditure on goods and service which comes under his or her budgetary planning.In this context,the three things that are significant are consumer wealth or income,market values or prices of respective goods and services that the consumer plans to purchase and the planned expenditure on those goods and services based on his/her personal wealth or money income and prices of the goods and services.A consumer might spend all his money income on purchase of goods and services or he or she might use some for consumption and the rest as personal saving.

Answer 2

Explanation: A consumer budget is the real purchasing power with which he can purchase quantities of two goods, given their prices. It is he balance of income and expenditures of a family, which characterizes the established or calculated living standard of various groups of workers' families.



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