Question

Explain the meaning of budget set and budget line.

Answer 1

1.Consumer's Budget It is the real purchasing power of consumer from which he can purchase the certain quantitative bundles of two goods at a given price. 2.Budget SetIt refers to the set of all possible combinations of two goods which a consumer can afford at given income and prices in the market.

Answer 2

♥ Budget line is the graphical representation of all possible combinations of two goods which can be purchased with the given income and prices , such that the cost of each of these combinations is equal to the income of the consumer .

♥ Budget set is the set of all possible combinations of the two goods which a consumer can afford , given income and price in the market .