Economy, asked by komallalit33, 1 year ago

What is meant by consumers budget constraint

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Answered by MusinadaSanjana
3

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Answered by Berseria
43

Answer :-

The income of a consumer is 'M'. The price of goods are P1 ,P2. Suppose that a consumer purchases x1 amount of good 1 and x2 amount of good 2. Then his expenditure on good 1 is P1x1 and on good 2 is P2x2. So the total expenditure on both the goods is  \sf \: p1x1 + p2x2

The consumer can purchase any bundle which should not exceed in his income.

  • If M is the income of the consumer P1,P2 re prices of good 1 and good 2 respectively. Then the inequality \sf \: p1x1 + p2x2 \leqslant m is known as budget constraint.

If M is the consumers income P1 ,P2 are prices of goods then all the consumption bundles within the budget constraint .

\bold{ \: p1x1 + p2x2 \leqslant m}=\bold{budget \: constraint }

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