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The Budget Line - Consumer Choice Theory - A Level and IB Economics
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A budget line shows the combinations of two products that a consumer can afford to buy with a given income – using all of their available budget.
The gradient of the budget line reflects the relative prices of the two products
The gradient of a budget line reveals the opportunity cost
The budget line will shift when there is:
1/ A change in the prices of one or both products with nominal income (budget) remaining the same.
2/ A change in the level of nominal income with the relative prices of the two products remaining the same
The gradient of the budget line reflects the relative prices of the two products
The gradient of a budget line reveals the opportunity cost
The budget line will shift when there is:
1/ A change in the prices of one or both products with nominal income (budget) remaining the same.
2/ A change in the level of nominal income with the relative prices of the two products remaining the same
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