Definition of Budget Set


The budget set is the set of bundles of goods an agent can afford. This set is a function of the prices of goods and the agents endownment.

Assuming the agent cannot have a negative quantity of any good, the budget set can be characterized this way. Let e be a vector representing the quantities of the agent's endowment of each possible good, and p be a vector of prices for those goods. Let B(p,e) be the budget set.

Let x be an element of R+L; that is, the space of nonnegative reals of dimension L, the number of possible goods. Then:

B(p,e) = {x: px <= pe}

Terms related to The Budget Set:

About.Com Resources on The Budget Set:

Writing a Term Paper? Here are a few starting points for research on The Budget Set:

Books on The Budget Set:

Journal Articles on The Budget Set:

mla apa chicago
Your Citation
Econterms. "Definition of Budget Set." ThoughtCo, Jun. 30, 2014, Econterms. (2014, June 30). Definition of Budget Set. Retrieved from Econterms. "Definition of Budget Set." ThoughtCo. (accessed March 22, 2018).