What line on a graph shows the combinations of two goods a consumer can afford given their income and prices?
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Budget line
The budget line acts as a physical boundary of a consumer's purchasing power, where the slope represents the relative price of the two goods. Any point inside the line is affordable but doesn't use all income, while any point outside is currently unattainable.
Also asked as:
- What term describes the graphical boundary representing all combinations of two goods a consumer can purchase with their total income?