Economy, asked by maddy4149, 1 year ago

What is meant by Compensated Budget Line? I didn't understood from the notes.

Answers

Answered by 29Aisha

=> Compensated budget line is obtained by adjusting income in a way such that at the new prices the original level of utility is obtained.
The slope of the compensated budget line is the same as that of the new budget line but the optimal point is on the original indifference curve .

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