## What is budget line shift?

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. At any point in between these two extreme cases, a combination of Product A and B are consumed. …

### What is meant by shift in budget line and rotation in budget line?

This rightward or leftward parallel shift of the budget line is known as “shift” of the budget line. On the other hand, if the money income of the consumer remaining constant, the price of one of the goods changes, then it is known as the “rotation of the budget line”.

**What causes upward shift in budget line?**

Changes in Income and Shifts in Budget line: Let BL be the initial budget line, given certain prices of goods and income. If consumer’s income increases while prices of both goods X and y remain unaltered, the price line shifts upward (say, to BL’) and is parallel to the original budget line BL.

**When can the budget line shift or swing?**

The shift in Price Line (Budget Line) Similarly when a consumer’s income decreases to Rs. 40 then the price line shifts downward to NQ where the consumer only can consume 2 units of X commodity (Rs. 20) and 2 units of Y commodity (Rs. 30).

## What is the slope of budget line equal to?

This slope of budget line is equal to ‘Price Ratio’ of two goods.

### What is a budget line equation?

If all income has been used for the goods, then the budget line is expressed by the linear equation: x P x + y P y = I xP_x+yP_y=I xPx+yPy=I. Where. x → quantity of good x. y → quantity of good y.

**Does the change in income affect the slope of budget line?**

In case of budget line, slope = PX/PY As change in income does not disturb the price ratio of the two commodities, the slope will not change and the budget line, after change in income will remain parallel to the original budget line.

**What is the slope of budget line?**

Note that the slope of the budget line is simply the ratio of the prices, also known as the price ratio. This is the rate at which you can trade one good for the other in the marketplace.

## What does budget line indicate?

Budget line is a graphical representation of all possible combinations of two goods which can be purchased with given income and prices, such that the cost of each of these combinations is equal to the money income of the consumer.

### What is slope of a budget line?

The slope of the budget line is the is the ratio of the prices of good 1 and good 2. This would mean price of good on the x axis divided price of goods on the y axis. The slope of a budget line is always negative as it is downward sloping.

**What does the slope of a budget line show?**

The slope of the budget line indicates the exchange ratio of the two goods x1 and x2, i.e., the rate at which he can substitute for x2 at the market place.

**What is the equation of budget line?**

The x-intercept of the budget line (6.17) = M̅/px = 500/10 = 50 is obtained, i.e., the consumer would be able to buy 50 units of good X with all his income; and the y-intercept of the line = M̅/py = 500/5 = 100, i.e., the consumer would be able to buy 100 units of good Y with all his income.

## What is a budget constraint line?

Budget Line. Budget line (also known as budget constraint) is a schedule or a graph that shows a series of various combinations of two products that can be consumed at a given income and prices. Budget line is to consumers what a production possibilities curve is to producers.

### How do you calculate the slope of a budget line?

We know, the slope of a curve is calculated as a change in one variable that occurs due to change in another variable. In case of budget line, slope = P X /P Y As change in income does not disturb the price ratio of the two commodities, the slope will not change and the budget line,…

**What is the slope of the budget line?**

The slope of the budget line indicates the exchange ratio of the two goods x 1 and x 2, i.e., the rate at which he can substitute for x 2 at the market place.