when does the budget line shift?
Answers
Answer:
A budget line shows the maximum consumption of a consumer at a given income level. It shifts parallelly when there is a change in income but rotates when the relative prices change.
A budget line is also called a budget constraint because it limits total consumption possibility of a consumer.
Explanation:
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Answer with Explanation :
A budget line shows the maximum consumption of a consumer at a given income level. It shifts parallelly when there is a change in income but rotates when the relative prices change.
A budget line shows the maximum consumption of a consumer at a given income level. It shifts parallelly when there is a change in income but rotates when the relative prices change.A budget line is also called a budget constraint because it limits total consumption possibility of a consumer. Total consumption in dollars at all points on the budget line equals total income. If Product A is plotted on y-axis and Product B on x-axis, the budge line touches y-axis at a point at which all budget is spent on Product A and it touches x-axis at a point at which only Product B is consumed. At any point in between these two extreme cases, a combination of Product A and B are consumed.