difference between budget set and budget constraint? (3 marks)
A budget set represents those combinations of consumption bundles that are available to the consumer given his/her income level and at the existing market prices. On the other hand, budget constraint implies that the total amount spent on two goods together should be less than or equal to his/her given income level. In other words, budget constraint suggests that a particular consumption bundle is available or affordable to a consumer if the total money spent on both the goods is less than or equal to the total available money income.
Then, the budget constraint is