Question
Explain the meaning of 'Budget set' and 'Budget line'.
✓
Answer
Budget set refers to the set of possible combinations of two goods which the consumer can afford with his income at given prices.
From the budget set if only such bundles are taken on which total expenditure equals total income and plotted on a graph, we get a line called the budget line.
From the budget set if only such bundles are taken on which total expenditure equals total income and plotted on a graph, we get a line called the budget line.
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