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The budget line represents the combinations of two goods that a consumer can purchase given their income and the prices of those goods. It illustrates the trade-offs a consumer faces when allocating their limited resources, showing the maximum quantity of one good that can be consumed for any given quantity of another. The position and slope of the budget line reflect changes in income and the prices of the goods, influencing consumer choices and preferences. Ultimately, it helps in understanding how consumers make decisions to maximize their utility within their budget constraints.
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What is difference between indifference curve and budget line?
budget line shows purchasing power of an consumer but indifference curve show willingness of consumer for two commodities.
What is budget line and show the shift in budget line?
A budget line is a locus of combination of two goods a consumer can afford to buy with his/her income.shift in a budget line can be caused by various factors like a change in individuals income
What is a budget line and how is it useful in reaching consumer equilibrium?
it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....
How is consumer utility maximised using indifference curve and budget line?
Consumer utility is maximized at the point where the budget line is tangent to the highest possible indifference curve. This tangency point represents the optimal combination of goods that a consumer can afford, balancing their preferences (indifference curve) with their budget constraint (budget line). At this point, the marginal rate of substitution between the two goods equals the ratio of their prices, ensuring that the consumer is getting the most satisfaction possible given their financial limitations. Thus, the consumer achieves maximum utility by selecting a consumption bundle that lies on both the budget line and the highest attainable indifference curve.
What is the definition of budget line in economics?
A budget line is a line showing the alternative combinations of any two goods that a consumer can afford at given prices for the goods and a given level of income.
How is budget line useful in reaching consumer equilibrium?
Budget line helps the consumer to decide to purchase a particular combination that falls in his budget line although a different combination is more desirable as it will give more satisfaction level.
What is difference between indifference curve and budget line?
budget line shows purchasing power of an consumer but indifference curve show willingness of consumer for two commodities.
How will an increase in income affect the budget line?
if the consumer`s income changes it will influence the budget line and it will shift to the right.
What is budget line and show the shift in budget line?
A budget line is a locus of combination of two goods a consumer can afford to buy with his/her income.shift in a budget line can be caused by various factors like a change in individuals income
What is a budget line and how is it useful in reaching consumer equilibrium?
it is a line showing all possible combinations of two goods(goods-1 and good-2) which a consumer can buy with his given money income and the price of the goods prevailing in the market.anywhere on the budget line the consumer spends his entire income on either good1 or good2 or both the goods. each point on the budget line indicates the different combinations of good1 and good2 which a consumer can buy with his income. in indifference curve analysis consumer attains his equilibrium when the slope of price line/budget line is equal to the slope of indifference curve.equilibrium is attained at that point where ic curve is tangent to the price line.....
How is consumer utility maximised using indifference curve and budget line?
Consumer utility is maximized at the point where the budget line is tangent to the highest possible indifference curve. This tangency point represents the optimal combination of goods that a consumer can afford, balancing their preferences (indifference curve) with their budget constraint (budget line). At this point, the marginal rate of substitution between the two goods equals the ratio of their prices, ensuring that the consumer is getting the most satisfaction possible given their financial limitations. Thus, the consumer achieves maximum utility by selecting a consumption bundle that lies on both the budget line and the highest attainable indifference curve.
What is the definition of budget line in economics?
A budget line is a line showing the alternative combinations of any two goods that a consumer can afford at given prices for the goods and a given level of income.
At the point of consumer equilibrium the slope of the budget line is equal to the?
Marginal rate of substitution
Difference between budget line and isocost line?
A budget line represents the combinations of two goods that a consumer can purchase given their income and the prices of those goods, illustrating their budget constraint. In contrast, an isocost line depicts the combinations of inputs (like labor and capital) that a firm can buy for a given total cost, reflecting the firm's budget for production. While both lines are used in economic analysis, the budget line focuses on consumer choices, whereas the isocost line pertains to production decisions.
What is the characteristics of budget line?
A budget line, or budget constraint, represents the combinations of two goods that a consumer can purchase given their income and the prices of the goods. It is typically downward sloping, reflecting the trade-off between the two goods—when more of one good is consumed, less of the other can be afforded. The slope of the budget line is determined by the relative prices of the goods. Changes in income or prices shift the budget line, affecting the consumer's purchasing options.
What is the definition of budget in economics?
A budget line is a line showing the alternative combinations of any two goods that a consumer can afford at given prices for the goods and a given level of income.
What information is embodied in budget line?
i think it represent the extent a consumer can his income provided he/she doesn, 't goes beyond the line
