What is Budget Set?
The set of all possible combinations of the two commodities a consumer can afford to buy with his given income and price in the market is known as a budget set.
In the above example, besides the three options; viz., (2, 0); (0, 2); and (1, 1), there are some other options which are available for the customer within his total income of ₹10, even if he does not spend his entire income. A budget set in this case will include all the bundles which have a total income of ₹10. The possible Consumer’s Bundles are (0, 0); (0, 1); (0, 2); (1, 0); (2, 0); and (1, 1). Hence, a consumer’s bundle is a quantitative combination of two goods which a consumer can purchase from his given income.
Difference between Budget Line and Budget Set
A budget line and a budget set are two essential concepts that help understand consumer choice and behavior under different constraints. The budget line represents all possible combinations of two goods that a consumer can purchase given their income and the prices of the goods. The budget set includes all the combinations of two goods that a consumer can afford given their income and the prices of the goods.