A consumer's budget constraint refers to the collection of all possible bundles that exactly exhaust a consumer's entire budget.
The budget constraint shows the various combinations of the two goods that the consumer can manage to afford at the provided market prices and within the particular earning degree. A budget constraint occurs when a consumer is limited in consumption patterns by a certain amount of income.
So when a consumer's income change then it causes the budget constraint to shift parallel to itself. A change in the price of one of the goods causes the budget constraint to pivot from one of the end points.
Hence, a budget constraint is a legal limit on how much individuals may spend.
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