what is consumer's
buget
Answers
Explanation:
A consumer budget is the actual purchasing potential with which he or she can purchase a number of two goods, provided their prices. Now, let us contemplate a customer who has only a fixed amount of income to expend on 2 commodities. The prices of the goods are furnished in the market place.
Answer:Consumer Budget
Have you ever prepared a monthly budget? How do you decide how much of a good to buy? And do you ever change your preferences? This can be understood by the economic concept of consumer budget. The concepts of budget line, budget set and slope of the budget are explored here.
Explanation:
Introduction of Variables and Basic Concepts
The concept of consumer preferences is integral to understanding consumer budget. In microeconomics, we understand consumer preferences using two goods, say 1 and 2. Let their prices be P1 and P2 and their quantities consumed be X1 and X2. To understand the budget, we must introduce the idea of money income of the consumer. Let that be denoted by ‘M’.
Consumer preferences are denoted by quantities of the two goods consumers are willing to purchase depicted using ‘bundles’. A bundle is a combination of good 1 and 2, written as (good 1, good 2). Thus, a bundle written as (1,2) means 1 unit of good 1 and 2 units of good 2. Similarly, (3,7); (8,4) are also bundles with different quantities of good 1 and 2.