Which of the following will NOT cause a change in the budget set of a consumer?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Change in quantities of goods purchased by the consumer.
The budget set represents all possible combinations of two goods that a consumer can afford given their income and prices.
It changes only when:
-
The income of the consumer changes, or
-
The price of one or both goods changes.
The Change in quantities of goods purchased by the consumer is a movement along or within the existing budget set or budget line. It represents a different choice of consumption bundle, but it does not change the set of all possible affordable bundles (the budget set), which is defined by the fixed income and fixed prices.