Match List-I with List-II.
| List-I | List-II | ||
|---|---|---|---|
| (A) | Budget set when goods are available only in whole units | (I) | Bundles that cost exactly the consumer’s income |
| (B) | Budget set when goods are perfectly divisible | (II) | Bundles that cost more than the consumer’s income |
| (C) | Budget line | (III) | A countable list of separate bundles |
| (D) | Points above the budget line | (IV) | All bundles on or below the budget line |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
The budget set is all the bundles the consumer can afford. Its form depends on whether the goods come only in whole units.
| List-I | List-II | Reason |
|---|---|---|
| (A) Budget set when goods are available only in whole units | (III) A countable list of separate bundles | With whole units, the affordable bundles can be listed one by one. |
| (B) Budget set when goods are perfectly divisible | (IV) All bundles on or below the budget line | Any amounts are possible, so it fills the area on or below the line. |
| (C) Budget line | (I) Bundles that cost exactly the consumer’s income | The line holds the bundles that cost the whole income. |
| (D) Points above the budget line | (II) Bundles that cost more than the consumer’s income | They cost more than M, so she cannot buy them. |
NCERT (2026-27): “EXAMPLE Consider, for example, a consumer who has Rs 20, and suppose, both the goods are priced at Rs 5 and are available only in integral units. The bundles that this consumer can afford to buy are: (0, 0), (0, 1), (0, 2), (0, 3), (0, 4), (1, 0), (1, 1), (1, 2), (1, 3), (2, 0), (2, 1), (2, 2), (3, 0), (3, 1) and (4, 0). Among these bundles, (0, 4), (1,3), (2, 2), (3, 1) and (4, 0) cost exactly Rs 20 and all the other bundles cost less than Rs 20. The consumer cannot afford to buy bundles like (3, 3) and (4, 5) because they cost more than Rs 20 at the prevailing prices.” “2.2.1 Budget Set and Budget Line If both the goods are perfectly divisible6, the consumer’s budget set would consist of all bundles (x1, x2) such that x1 and x2 are any numbers greater than or equal to 0 and p1x1 + p2x2 ≤ M. The budget set can be represented in a diagram as in Figure 2.9. All bundles in the positive quadrant which are on or below the line are included in the budget set. The equation of the line is p1x1 + p2x2 = M (2.2) The line consists of all bundles which cost exactly equal to M. This line is called the budget line. …” “2.3 Optimal Choice of the Consumer … Points above the budget line are not available to the consumer. …” |