Budget Line

Definition

A graphical representation of all possible combinations of two goods that a consumer can purchase with a given income at given market prices. Also called the 'Price Line'. Its slope = − (Price of X / Price of Y). A change in income shifts the line; a change in price rotates it.

Example

"With income ₹100, if apples cost ₹10 and oranges cost ₹20, the Budget Line connects (10 apples, 0 oranges) and (0 apples, 5 oranges), showing all affordable combinations."

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