Economics explained
Category:
Behavioral economics
Budget lines
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Consumers are constrained in what they are able to buy due to their limited income and the prices of goods they wish to buy.
The budget line shows numerically all the possible combinations of two products that a consumer can purchase with a given income and fixed prices.
The budget line shows what combinations of two goods you are able to buy, given
your income available to spend on them and
their prices
This budget line shows various combinations of chocolate bars and candy bars that can be purchased assuming that
the price of a chocolate bar is $1 and the price of a candy bar is $2 and
the consumer has a budget of $30 to be divided between the two goods
If you are limited to a budget of $30, you can consume any combination of chocolate bars and candy bars along the line (or inside it). You cannot, however, afford to buy combinations that lie outside it.