Theory of Consumer Choice

Consumer Choice  Theory of the budget constraint depicts the limit on the consumption “bundles” that a consumer can afford. The theory of consumer choice is the branch of microeconomics that relates preferences to consumption expenditures and to consumer demand curves. People consume less than they desire because their spending is constrained, or limited, by their income. The budget constraint shows the various combinations of goods the consumer can afford given his or her income and the prices of the two goods.