Consumer’s Budget

What is Consumer’s Budget?

A consumer budget is the actual purchasing potential with which he or she can purchase a set of two goods, provided their prices.

Now, let us contemplate a customer who has only a fixed amount of income to spend on 2 commodities. The prices of the goods are furnished in the market place. The customer cannot either buy any or every combination of the 2 commodities that he or she may want to purchase.

The utilisation bundles that are obtainable to the customer rely upon the cost of the two commodities and the earning of the customer. Given his or her fixed income and the cost of the 2 commodities, the customer can manage to purchase only those bundles which price her less than or equal to her earning.

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