Question

How is the equation indicating budget line different from the equation indicating budget set?

Answer 1

The budget line equation shows different combinations of Good-1 and Good-2 that the consumer can buy spending his entire income across the two goods. The budget set equation shows all attainable combinations of Good-1 and Good-2 when the consumer spends his entire income or a part of it on the purchase of two goods. It is indicated by the shaded area under the budget line in Figure.