Question

Explain the distinction between budget set and budget line.

Answer 1

Basis of Difference	Budget line	Budget set
Meaning	Bundles costing exactly the consumer’s income	All affordable bundles costing no more than the income
Expenditure	Equal to income	Less than or equal to income
Location	Lies on the boundary line	Lies on or below the budget line
Equation	`(P_X X+P_Y Y=M)`	`(P_X X+P_Y Y\leq M)`