The budget line represents the set of all baskets the consumer can afford while spending all available income.

Question

Quizplus · Accepted Answer

This is the definition of the budget line in consumer theory. The budget line shows all the possible combinations of two goods that a consumer can afford given their income and the prices of the goods. It represents the boundary between the affordable and unaffordable combinations of goods.

The Budget Line Represents the Set of All Baskets the Consumer