Consumer choice involves selecting a combination of products as a market basket, or a product bundle. The chosen bundle should provide the highest level of satisfaction to the consumer that can be attained within the constraints of their budget.
Budget constraints show the product bundles that a consumer can afford. Any product bundle that can be bought using the consumer's entire budget is preferable. If the entire budget is not used, then the unused amount can be utilized to purchase more products, which increases the consumer's total satisfaction.
A consumer will want to maximize potential satisfaction. This can be done by purchasing product bundles that have ever larger quantities of products. However, the limited budget means the consumer cannot buy product bundles with unlimited goods.
For instance, a student receives a weekly allowance of $100 that he spends on buying books and snacks. For him, an optimal bundle is the one that maximizes his satisfaction while staying within his budget or the weekly allowance.
