Question

What is budget set explain what can lead to a change in budget set?

Answer 1

A budget set can change when: The money income of a consumer changes. If money income increases, a consumer can buy more of both goods. ... At higher prices, less quantity of a good can be bought and hence the consumer preference will change.

Answer 2

Answer:

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

Budget set is based on the assumptions of constant income of consumer and constant price of the commodities. Any change in the income of the consumer or/and price of the commodity, will lead to change in the budget set.