Q16- Explain the distinction between budget set and budget line.
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BUDGET SET
IT COMPRISES OF SETS OF BUNDLES WHICH A CONSUMER CAN PURCHASE FROM HIS INCOME.
EQUATION FOR BUDGET SET
P1 X1 + P2 X2 <= M
BUDGET LINE
IT COMPRISES OF ALL THOSE BUNDLES WHICH COST THE CONSUMERS EXACTLY EQUAL TO HIS INCOME.
EQUATION FOR BUDGET LINE P1 X1 + P2 X2 = M
IT CAN BE DRAWN WITH THE HELP OF HORIZONTAL INTERCEPT AND VERTICAL INTERCEPT.
IT COMPRISES OF SETS OF BUNDLES WHICH A CONSUMER CAN PURCHASE FROM HIS INCOME.
EQUATION FOR BUDGET SET
P1 X1 + P2 X2 <= M
BUDGET LINE
IT COMPRISES OF ALL THOSE BUNDLES WHICH COST THE CONSUMERS EXACTLY EQUAL TO HIS INCOME.
EQUATION FOR BUDGET LINE P1 X1 + P2 X2 = M
IT CAN BE DRAWN WITH THE HELP OF HORIZONTAL INTERCEPT AND VERTICAL INTERCEPT.
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