Before turning to the economics definition of "budget line," consider another concept: the line-item budget. This is effectively a map of future expenditures, with all the constituent expenditures individually noted and quantified. There's nothing very complicated about this; in this usage, a budget line is one of the lines in the budget, with ...
The budget line will shift when there is: A change in the prices of one or both products with nominal income (budget) remaining the same. A change in the level of nominal income with the relative prices of the two products remaining the same. Subscribe to email updates from tutor2u Economics.
Price Line or Budget Line: Definition and Explanation: The understanding of the concept of budget line is essential for knowing the theory of consumer’s equilibrium. "A budget line or price line represents the various combinations of two goods which can be purchased with a given money income and assumed prices of goods".
ADVERTISEMENTS: Read this article to learn about the slope and shift of the budget line! So far, we have discussed different combinations of two goods that provide same level of satisfaction. But, which combination, will a consumer actually purchase, depends upon his income (‘consumer budget’) and prices of the two commodities.
Business Jargons Economics Budget Line Budget Line Definition: The Budget Line , also called as Budget Constraint shows all the combinations of two commodities that a consumer can afford at given market prices and within the particular income level.
Budget line. A budget line shows the combination of goods that can be afforded with your current income. If an apple costs £1 and a banana £2, the above budget line shows all the combinations of the goods which can be bought with £40. For example: 20 apples @ £1 and 10 bananas @£2; 10 apples @£1 and 15 bananas @£2
In economics, a budget constraint represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income. Consumer theory uses the concepts of a budget constraint and a preference map to analyze consumer choices. Both concepts have a ready graphical representation in the two-good case.
Budget Constraint all possible combinations of goods and services that can be attained given current prices and limited income Budget Line a graphical representation of a consumers budget constraint Price Ratio the slope of the budget line, represents the price of x in terms of good y Size Effect
Tangent to Indifference Curve: The indifference curve touches the budget line at a point, and this point is known as the consumer’s equilibrium. Assumptions of a Budget Line. As we know that economics is mostly based on assumptions, so goes for the budget line.
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