Which of the following would appropriately define a budget set?

$P_1X_1+P_2X_2≤M$

The correct answer is Option (4) → $P_1X_1+P_2X_2≤M$

A budget set represents all the combinations of two goods (X₁ and X₂) that a consumer can afford to buy given:

• Their income (M)

• The prices of the two goods (P₁ for X₁ and P₂ for X₂)

The inequality: $P_1X_1+P_2X_2≤M$ means the total spending on goods X₁ and X₂ must be less than or equal to the income. This includes all affordable combinations, making it the correct representation of the budget set.