Micro

Consumer Behaviour

Easy

Budget Set is __________

Given the prices of the goods and the income of a consumer.

Any bundle as long as it costs less than or equal to the income

A set of price available to producer.

Set of bundles available to the consumer

✅ Correct Option: 4

A budget set is the collection of all possible bundles of goods that a consumer can afford given income and prices.

If income is $M$ and prices are $P_1, P_2$ for goods $x_1, x_2$ , then:

$P_1 x_1 + P_2 x_2 \le M$

This inequality represents all affordable bundles.

The boundary of the budget set is:

$P_1 x_1 + P_2 x_2 = M$

This is the budget line, showing bundles that exactly exhaust income.

All points on or inside the budget line are affordable.

Points outside are not attainable with the given income.

Hence, the correct answer is:

Set of bundles available to the consumer.

2025: 3 June Shift 1

In a situation when MRSxy > Px / Py, the consumer would react by:

2025: 28 May Shift 2

How the revelation of the fact that junk-foods might be injurious to health can affect the Demand Curve of junk-foods.

2025: 29 May Shift 1

A consumer derives 10 utilities of satisfaction from consuming 1st unit of good X and 6 utilities of satisfaction from the next unit. What is the marginal utility of the second unit?

2025: 13 May Shift 2

From which of the following, consumers can choose their consumption bundle?

2025: 2 June Shift 1

The Law of Diminishing Marginal Utility states that when more and more units of a commodity are consumed, Marginal Utility __________

2026: 15 May Shift 1

What is the cause behind the convexity of indifference curve to the origin?

Budget Set is __________

Solution

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