Question 1 of 26beginner🧠 RememberVery Short1 mark
What do you mean by the budget set of a consumer?
Correct Answer
The budget set is the collection of all bundles of goods that a consumer can buy with her income at the prevailing market prices. It consists of all bundles that are available to the consumer, where the cost of each bundle is less than or equal to the consumer's income.
Exercise: EXERCISES | Q: 1
For More Understanding
Explanation
This is a direct 1-mark definition question. The textbook clearly defines the budget set as 'the collection of all bundles of goods that a consumer can buy with her income at the prevailing market prices.' The mathematical representation is p₁x₁ + p₂x₂ M, meaning the consumer can choose any bundle as long as it costs less than or equal to her income.