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Budget Constraint

Defines the set of affordable consumption bundles given income

M

and prices

P = (p_1, p_2, \dots)

. Mathematically:

\sum_{i=1}^{N} p_i x_i \le M

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The statement of the theorem

Let

\mathbf{x} = (x_1, x_2, \dots, x_N)

be the consumption bundle,

P = (p_1, p_2, \dots, p_N)

be the price vector, and

M

be the consumer's income. The set of affordable bundles

X

is defined by the budget constraint:

\sum_{i=1}^{N} p_i x_i \le M

Source: Wikipedia